Stocktake: counting what you have without closing for a week

A stocktake is a physical count of everything you hold, compared against what the records say you hold. It exists because records drift: things get sold and not recorded, broken and not written off, taken for samples, miscounted on delivery, or quietly stolen. The count is how you find out by how much.

It also matters for the accounts. Closing stock feeds directly into cost of goods sold, and a wrong closing figure moves your reported profit without anything real having changed. That is why accountants ask about it and why the count needs to be defensible rather than approximate.

Preparing, which is most of the work

1. Tidy first. An hour spent putting like with like saves several during the count and removes the most common source of error, which is the same item counted in two places.
2. Freeze movement. Nothing in or out during the count, or if that is impossible, a marked quarantine area for anything that arrives.
3. Print or export the count sheets without the expected quantities on them. Counters who can see the expected number find the expected number.
4. Assign areas so that no area is counted by the person who normally manages it. This is a control, not an insult, and saying so in advance makes it one.
5. Decide the cost basis in advance — what you paid, and which purchase price if it changed during the year.
6. Brief everyone for ten minutes on what counts as one unit. Boxes, singles, opened packs and partial cases are where the arguments come from.

The count itself

• Two people per area where the value justifies it: one counting, one recording.
• Count everything, including damaged and obsolete items — write them down and deal with them afterwards rather than skipping them.
• Mark counted areas physically as you go. Missed shelves are the most common error and the hardest to spot afterwards.
• Recount any line where the variance is large before accepting it. Most large variances are counting errors, and finding out afterwards is expensive.
• Record the date and who counted what. A count nobody signed is a count nobody will stand behind in three months.

Never put the expected quantity on the count sheet. Given a number to confirm, people confirm it — not through dishonesty but because that is how attention works. Counting blind and comparing afterwards takes the same time and produces a materially different answer, and this single change is what separates a stocktake that finds problems from one that certifies them.

Reading the variances

The count is the input; the variance analysis is the point. Look at the value of the difference rather than the count of items, because a hundred missing screws matter less than one missing machine. Then look for the pattern: consistent shortages in one product family suggest theft or breakage, shortages across everything suggest a recording problem, and surpluses usually mean deliveries recorded twice or returns never processed. Write off what has gone, and write down what will never sell — carrying obsolete stock at cost overstates both the asset and the profit until somebody finally admits it.

Doing it less painfully

The annual full stocktake is a tradition rather than a requirement for most businesses. Counting a portion of the range continuously — high-value and fast-moving lines often, slow lines rarely — spreads the work, finds errors closer to when they happened, and usually removes the need to close for a day. That approach is covered in cycle count, and it is the single change most likely to make this whole exercise less unpleasant. The ongoing system it feeds is inventory management.

Counting reliably turns up lines nobody has touched in years. Dead stock is what that discovery is called, and the only live decision about it is where the goods go now, not who bought them.

Where the numbers go

Ettex Sheets is where count sheets and variance calculations belong — the arithmetic is simple and you want to see it. The valuation flows into Ettex Books as closing stock, which is what makes cost of goods sold correct, and the item records live in Ettex Records.

Being clear: there is no barcode scanning, no stock-taking app and no handheld integration. Counts are recorded by people and entered; for a business with a few hundred lines that is genuinely fine, and above a few thousand it is not, at which point a scanning system pays for itself.

Two records decide whether the count can be trusted. A goods received note is what deliveries are booked in against, and a production schedule tells you which materials should be committed rather than merely present.