As a business owner, keeping tabs on your accounting inventory is an important responsibility that should always be your top priority as it drives a successful cost control of your operations.
By effectively managing your inventory, you can easily reap significant financial benefits. Such benefits typically include tracking the costs of your inventory, monitoring profits, predicting inventory and forecasting changes in the prices of goods for sale.
To help you tick all of these in your list, here are a number of tips and tricks to keep in mind:
Setting Inventory Management Objectives
As previously mentioned, there are a myriad of financial benefits that can come out from your strategic inventory management initiatives. Unfortunately, it would be difficult to focus on them all at once.
For starters, you can familiarize yourself with the types of inventory management and see which one fits the bill.
Just-in-Time ManagementSafety stock isn’t available for this inventory management; instead, it works on an ‘as-needed’ basis and operates with low inventory levels.
Materials Requirement PlanningAn inventory management mostly based on software programs. Accurate sales records helps in projecting of inventory needs, which they later on forward to the suppliers in a timely manner.
Economic Order QuantityEconomic Order Quantity is the ideal order quantity a company purchases to minimize inventory expenses.
Days Sales of InventoryIndicates the average time in days that a company takes to turn its inventory, including goods that are a work in progress, into sales.
Vendor Inventory ManagementThis type of inventory management involves the buyer providing the product information to the vendor and the latter maintains an agreed inventory of the material.
As such, the best you could do is to handpick the benefits that your business needs most and to focus on making these your objectives through the different types of inventory management. Satisfactory results come faster this way.
Finding a Reliable Inventory Management System
As soon as your accounting inventory management goals are clear, the next thing to do is to look for a modern tool that will help speed up your inventory process.
Ever considered integrating an inventory management tool with your cloud accounting program? Xero makes all of that possible. By using a business accounting software like Xero or QuickBooks with your chosen inventory management app, you can easily progress in inventory management while keeping a close eye on your business finances.
Seek Training for Your Staff
Using an inventory management tool can make things easier for you and your employees, but there is always the adjustment phase to consider.
Before taking a leap into using any kind of tool, make sure that you and your staff are well-trained. Seek assistance to keep things ironed out before complex and technical issues blow up and complicate your inventory process even further.
Accounting inventory management is at the core of your business financial initiatives. Make sure that your inventory is right on track and that together with it, your business finances are also doing well. Otherwise, you would find it difficult to keep your business on solid ground.
How does the idea of integrating inventory management with your cloud accounting software sound? Find out more about cloud-based inventory management by getting in touch with our qualified advisers at D&V Accounting Outsourcing or by downloading our Startup Solutions guide below.
This post was first published 13 January 2016 and edited 06 August 2020.