Perpetual inventory is a key to accurate stock figures and efficient warehouse management. The definition of perpetual inventory describes it as a simplified inventory method that is carried out continuously throughout the financial year in order to reduce the effort and error rate for companies.
Unfortunately, however, errors occur time and again when carrying out this form of stocktaking, which can have serious consequences. In this blog post, we look at the importance of an error-free perpetual inventory and show how these errors can be avoided.
Find out how you can save time and money by using this method correctly.
Content of the blog post
Introduction to perpetual inventory
Continuous stocktaking is an essential part of corporate management and makes a significant contribution to safeguarding inventories and thus to the company's success.
A perpetual inventory is a form of inventory in which stock levels are recorded continuously and regularly throughout the financial year. In contrast to the physical inventory, where stocks are determined on a specific date, perpetual inventory is aimed at continuous stock management.
Stock levels are constantly monitored through continuous counts and checks, deviations are directly recorded and corrected, and the type of goods are systematically categorised by type and quantity to ensure a comprehensive overview of stock levels.
The use of the perpetual inventory method enables methodical and efficient inventory monitoring and management.
  |
Fact Sheet ♦ Perpetual inventory vs. key date inventory |
Requirements for a successful inventory method
Permanent stocktaking requires certain prerequisites. In order to be able to carry out a permanent inventory, the company must have a well-organised warehouse management system. Clear guidelines and procedures are also required to ensure that all stock is recorded regularly and systematically.
It is also necessary for inventory data to be seamlessly integrated into financial accounting systems using software in order to ensure efficient management, digitalisation and simplification of inventory processes.
Differences to the balance sheet date inventory
There is also a difference between the perpetual inventory and the closing date inventory. The main difference lies in the timing of the inventory. While the periodic inventory is carried out once a year on a fixed date, the balance sheet date, the permanent inventory updates the stocks continuously throughout the year.
This enables a more accurate and more timely recording of inventory data. The choice of balance sheet date for carrying out the balance sheet date inventory has a significant impact on the company's financial reporting and should therefore be carefully considered.
Carrying out the permanent inventory
Of course, there is also the question of who carries out the permanent inventory. As a rule, the perpetual inventory is carried out by specially trained employees of the company. These employees often work in warehouse management or accounting and are responsible for monitoring and correcting stock figures.
The perpetual inventory can be carried out at any time during the financial year, depending on the specific requirements of the company and legal regulations. However, many companies choose to carry it out at regular intervals to ensure that inventory data is continuously reviewed and updated.
The permanent inventory begins with the establishment of a system for the continuous recording of all stock movements, a process known as Inventory is known.
This usually involves barcode scanners and a Inventory software used, which automatically updates stock levels as soon as goods come in or go out. Employees carry out regular counts and all data is constantly checked so that discrepancies can be corrected immediately.
Frequent sources of error
Unfortunately, errors occur time and again when carrying out the permanent inventory, which can lead to incorrect stock figures and therefore inaccurate business data. The most common sources of error are:
Missing documentation
Inadequate documentation of stocktaking processes can lead to confusion and incorrect stock figures. For example, if it is not clearly recorded which stocks have already been counted and which are still outstanding, double counting or omissions can occur.
Insufficient staff training
Permanent stocktaking requires staff to work accurately and responsibly. However, if they are not sufficiently trained or are not aware of the importance of their role in stocktaking, errors can quickly occur.
Technical issues
Technical problems such as defective scanners or problems with data transmission can lead to errors.
Human error
Last but not least, human errors, such as incorrect entries or forgotten counts, can also lead to incorrect stock figures.
Comparison of target stock with actual stock
Regularly checking and comparing the planned (target) inventory with the actual (actual) inventory is crucial for recognising and correcting discrepancies at an early stage. This helps to improve the accuracy of inventory management and increase the efficiency of the stocktaking process.
Important tips for an error-free permanent inventory
To avoid these sources of error and ensure an error-free permanent inventory, there are some important tips that we, as experts in this field, recommend:
Regular training of employees
Comprehensive training is essential to raise awareness of the importance of perpetual inventory and to teach employees the correct work steps and procedures.
Use of professional inventory software
Modern inventory software can help to Inventory process more efficient and error-free. Automatic data acquisition and processing minimises human error sources.
Documentation and review of inventory procedures
Detailed documentation of inventory processes and regular checks can help to recognise and correct errors at an early stage.
Continuous monitoring and corrective measures
Continuous monitoring of stock levels and immediate intervention in the event of deviations can help to avoid errors and improve the accuracy of stock figures.
Advantages of a permanent inventory
A key benefit of perpetual inventory is that by continuously updating inventory, companies have accurate stock information at their fingertips, allowing them to better respond to market demands and plan the supply chain more efficiently.
Constant monitoring of actual stock levels plays a crucial role in ensuring inventory accuracy. In contrast to a snapshot inventory, which only provides a one-time overview and can lead to disruptions in operations, perpetual inventory allows for seamless integration into daily operations.
Avoiding errors with perpetual inventory provides companies with numerous benefits, such as greater accuracy of inventory data, minimising overstocking and reducing losses due to theft or spoilage.
These are the advantages that we as experts hear time and again from our customers:
1. Time and cost savings
An error-free permanent inventory not only saves time for correcting errors, but also costs for possible recounts or penalties.
2. Avoidance of penalties and fines
Incorrect stocktaking not only has financial consequences, but also legal consequences. An error-free permanent inventory therefore protects against penalties and fines.
3. Improvement of business processes and data quality
Accurate inventory figures allow business processes to be optimised and data quality to be improved. In the long term, this helps to increase efficiency and the company's success.
Case study: Successful implementation of an error-free perpetual inventory
A company in the logistics sector was repeatedly struggling with inaccurate stock figures due to errors in the permanent inventory. However, after the introduction of professional stocktaking software and regular employee training, these errors were successfully avoided. This not only saved time and costs, but also improved business processes and data quality.
Permanent stocktaking is an essential part of efficient company management and should always be carried out without errors. By avoiding errors, you can not only save your company a lot of time and money, but also avoid legal sanctions and improve the quality of your business processes and data.
We recommend that you take advantage of modern inventory software and invest in regular training for your employees to ensure the accuracy and efficiency of your inventory management. These measures should contribute to the long-term success and competitiveness of your business.
Would you like to have the most important information on perpetual inventory at your fingertips? Then download our free PDF on the topic now.
To keep abreast of the latest developments and strategies for Inventory to stay informed, subscribe to our blog.
Come on board and experience the difference a well thought-out inventory strategy can make in your company.