Well, it’s inventory time again! The time to assume your inventory as money sitting around in another form.
If closing books by counting all the stocks before this financial year end appear to be a lot tiring. Then listen to what Suresh did!
Suresh owns a Kirana store in Bangalore and since last year he’s started to sell a wide range of products. He was very happy with the sales until he noticed a mismatch between the records and the assets that remained when he had to close books at the financial year end.
Even though he managed to sell about 200% more products than the previous year, he noticed that he actually made losses this year. Can you guess the reason? It was the absence of a proper inventory management!
There were missing stocks he couldn’t trace. He had to count it as a loss. Inventory is a placeholder for money. You paid money for it, and you’ll get that money back (and then some) when you sell it. If there are any errors in calculating stocks, this would result in wrong profits and income and finally wrong financial statement.
He found that adjusting inventory at the end of the financial year end was simply too much to handle for him and people around him as it required lots and lots of counting. Also, he found it difficult to pinpoint every tiny issue as he was looking back at an entire year.
There are several reasons why his inventory might have been inaccurate:
There were many products lying down at this store that had crossed Expiry Date.
But, he had sold those of which had a lot of time to expire. Meaning, he failed to sell right things at right time.
With a solid inventory management software like vyapar, he could have traced out oldest items with soon to expire dates and made sure they’re the ones to be sold first. This avoids such unnecessary spoilage.This is particularly important for perishable products so you don’t end up with unsellable spoilage.
Stocks gone out of season, out of style lied dead with him.
By managing inventory better, one can avoid such DeadStock. If the products are always sitting at the back, they’re more likely to be unseen. Plus, design often changes over time.
You don’t want to end up with something obsolete that you can’t sell. This typically means adding new products from the back or otherwise making sure old product stays at the front.
He stocked up too much product which ended up difficult to sell.
He spent money on buying wrong products. When one avoids this sort of wrong investments, it’s certain to save money on storage.
Due to which he Missed Out Sales as he failed to replace them on time.
As he had no proper inventory system, he didn’t exactly know how much product he had, and which product will run out soon.
With vyapar, one can set a minimum amount of products that must be on hand at all times. Once reached, the software gives you a low stock alert. Hence you’ll know when to order more which helps you in not missing sales.
Adding returned goods to inventory and old goods which might have to be sold at a discount was too tedious for him to keep count on.
As a result, he had a poor count on inventory at any given point which resulted in this Huge Mismatch.
Afterall, errors while making entries in account books are bound to happen
And moreover, Suresh is no superhuman to do all the additions and subtraction 100% Accurate.
You know what? He could have been smarter by choosing a software to take care of these. He could always rely on software to get reports of his inventory status not less than 100% accurate.
To take advantage of Business management software is hence advisable. If you run your business with vyapar, inventory management is already built in.
Holding inventory ties up a lot of cash. That’s why a good inventory management is crucial for growing a company. Just like cash flow, it can make or break your business. This is why even Suresh started managing his inventory using vyapar.
If you’re a small business owner struggling to manage inventory all by yourself, choose the right inventory management techniques for your business, and start implementing them today.