What is an Inventory Reconciliation and how to do it in your business?
Inventory control goes far beyond counting the available stock. There is a lot of data related to stock management that should be verified. For example, the state of the assets or the reliability of the financial statements.
This is not a process that can be done in isolation. When a company has multiple locations, inventory management becomes more complex. It is vital to reconcile and periodically validate that our physical inventory corresponds to our data record and accounting data.
And this is where a solution like Conciliac are necessary so that the procedures are executed correctly. If doing inventory validations at the end of the year, on a monthly or quarterly basis, means you have to do a manual process, then the work will be long and complex.
What is an Inventory Reconciliation?
Inventory reconciliation is the process of verifying the accuracy of physical inventory data and the inventory accounting record owned by the company.
In other words: the data that your company has regarding your stocks must match with the merchandise that you actually have on the premises. At the same time, we must reconcile this data with the accounting balances of the company. If you have USD100,000 of actual inventory, it is not acceptable to declare that you have USD115,000, which reflects a lack of precision in your inventory that can cause problems with inspections and audits.
This is a process that helps you know the efficiency in the inventory management. Small businesses typically do this at the end of the year, but it is becoming increasingly important to do periodic counts on a monthly or quarterly basis so inventory errors don’t pile up.
Benefits of reconciling physical assets with the accounting record
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Among other advantages of inventory reconciliation, the following should be highlighted:
- Detect losses, breakages and depreciations of physical assets.
- Locate obsolete assets in your inventory.
- Reflect the reality of your assets in your data.
- Have accurate information for decision making.
- Comply with legal regulations that oblige companies to register inventory.
How to do inventory reconciliation in your company?
First of all, it is necessary to make a prior analysis of the existing assets.
Using tools such as product labeling, a specific physical asset can be located and identified in your storage centers. And here it will be crucial to have a reconciliation tool that allows you to check and validate the relationship between existing assets and the accounting record.
This operation can be done either manually, making manual calculations and accounts to see the surplus and missing products, or in an automated way. With a tool like Conciliac, inventory reconciliation will be done in a much faster and more agile way, being able to determine the current value of your assets without the need to check the differences manually, something that if you have thousands of different items, can be very complex and lead to numerous technical errors.
Avoid manual reconciliation by starting to manage inventory reconciliation more efficiently and productively. Save time and prevent this from creating difficulties in your business. Request more information about our solution to solve your doubts.