stocktaking

Stocktaking is the process of counting and verifying the quantities and condition of inventory on hand. It is conducted to confirm that recorded stock levels in the inventory system match physical stock, to identify losses from shrinkage, damage, or errors, and to support reliable financial reporting and operational planning.

There are several approaches to stocktaking. A full physical stocktake counts all items at once, while cycle counting examines a rotating subset of items on a schedule. Spot checks and random verifications can supplement these methods. Many organizations also maintain a perpetual system that is periodically reconciled through stocktaking.

The typical cycle includes planning, organizing counting teams and areas, performing the counts, recording the results, reconciling discrepancies with the inventory records, investigating the causes of differences, and posting adjustments in the accounting books.

Technology such as barcode scanning, RFID tagging, and inventory management software can improve speed and accuracy. Data collected during stocktaking feeds into stock valuations and helps with procurement decisions, warehouse layout, and forecasting. Physical counts are commonly used for annual financial reporting but may be performed more frequently in high-loss industries.

Benefits include more accurate stock data, better replenishment, fewer stockouts and excess inventory, and more reliable financial statements. Challenges include labor demands, operational disruption, counting errors, and the need for timely reconciliation. Best practices emphasize pre-count preparation, organizing and labeling stock, separating counted items, training staff, securing the counting process, and documenting discrepancies for audit trails.