When you are starting a business, you make an investment in the purchase of the products you are going to market, at first you know everything you bought to keep a good stock, but over the months you neglect the inventory and it is a mistake that most commit It is necessary that you keep track of your stock that does not win you laziness, if you let time pass and do not know where to start, continue reading so that you know the benefits you can have by keeping track of your inventories.
The concept of inventory in a business is based on all the products and / or raw materials that you have for future sale. The inventory consists of all the stock of the business that has not been sold, the raw material you own (create new products) and all those products that are in the production process that will soon be available for sale.
It is very important that you control all the items that exist in your inventory, this information allows you to know the real situation to make administrative decisions that will always be reflected in a good customer service.
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With the correct information from your inventory, you will always have the following advantages:
- Know at what time less or more of certain products are sold for you to be prepared.
- Buying in larger quantities decreases the price of each product.
- Make promotions of products that have expiration or are deteriorating to move them.
- You know which product moves more in a certain period and anticipate the purchase so that you continue selling and have the acceptance of your customers.
- You have the inventory both in the balance sheet and in the income statement.
Types of Inventories
The types of inventories that you can use in your business will depend on your current needs, the main five are:
Perpetual Inventory: You must record the operations of all products in a way that you can know at any time the value of your final inventory, the cost of what you sold and the gross profit or loss. It helps you to have more control, because the records in the inventory are always updated.
Intermittent Inventory: You can do it several times a year and you can use it for various reasons.
Initial Inventory: As the name implies, it is done at the beginning of your operation
Final Inventory: You do it at the end of your fiscal year
Physical Inventory: It is the inventory where you have to count, weigh (if necessary), taking your notes of each of the different products you have in existence on the day you do it.
How to save money by making a correct inventory
By making a good administration of your inventory you can save a lot of money:
- Avoid loss: Products that have a long time in your inventory for not moving at the time it was decided to put it on sale (old-fashioned or do not have the interest you expected) to know them you can avoid losses and move the product as soon as possible.
- Save on storage costs: You should not store your products too long, the cost of these may vary in extremes or you are accumulating product that does not have the output that you expected to increase your storage costs.
- Prevent the deterioration of products: Managing your inventories well helps you avoid the deterioration of the products or unnecessary losses, for example, if you sell products with expiration dates (food, creams) if they do not move in time from the inventory they are going to stay and means a loss that you cannot recover.
- Manage Cash Flow: A good administration of your inventory will help you improve cash flow, you must take out the product so that it can be sold otherwise you will not generate income, you paid cash, it is time to recover it. You will not be able to pay your suppliers for products that are not sold.
Knowing the value of your inventory, helps you make decisions when making the purchase of products that you need, acquiring the right amount is a good planning to have no problems when selling the products and have the money to invest again .With an Administrative System you can keep track of your inventories without any problem, a system is essential to help you know the products that have greater acceptance among your customers and not a simple intuition when making your purchases, it is simple, it helps you save a lot of money. With order and good control, you will avoid having products that are not sold and therefore less monetary losses.
How to perform inventory control.
You can help with a Point of Sale System, this helps you to classify your products by categories, if the products have bar codes do not change them, use them help you to be more agile, you only need a barcode reader to be more Fast and decrease the waiting time of your customers. Keeping track of inventories helps you have accounting available; it involves two important aspects:
- The cost of purchased inventory.
- The cost of inventory is retained in your business accounts until it is sold.
The valuation of inventories is performed according to a specific basis in monetary terms, these 4 methods are commonly used in businesses or companies:
Specific identification: It is used in businesses where the same products or items with individual characteristics (reference, number, brand and cost). It is used to keep records to identify the products accurately and their exact cost, these are identified through a purchase and your invoice. You can determine the specific cost of sales and value the final inventory with the specific cost of the products.
First entries first departures (FIFO): One of the most used in a store, when you buy the products and are the first to enter the inventory are the first to be sold (cost of sales) or consumed (cost of production). For products that have expiration it is very important to take into account the above, this method applies to all your products, otherwise they will wear out, there may be some change in the presentation of the product and then not being able to sell them. The final inventory is formed by the last articles that became part of the inventories.
Last entries first departures (LIFO): The LIFO method for calculating the cost of inventory is the opposite of the LIFO method. The last products you bought are the first to be sold or consumed, the objective is that in the final inventory you have the products that were bought first. This is a very useful method when the prices of the products are constantly increasing, financially applying this method implies a higher value of the cost of sale because you determine based on the latest products purchased that are usually more expensive.
Do not forget that all your expenses and income, whether in the personal or professional field, should always be controlled. For replacements of 80mm paper you can contact us: POSmart.