Brief introduction
Taking control of your stock management can be daunting, especially for a small business owner. Keeping on top of stock takes, managing reorders, and running out of products when demand is surging – it can be overwhelming trying to keep up while running your business.
Don’t worry – in this article we’ll run through an introduction to stock control, the importance of effective stock control for small businesses, best practises, doing a manual stock take, plus ten tips to take back control of your stock.
Table of Contents
- Understanding stock control
- Why is effective stock control important for small business owners?
- How to manually conduct a stock take
- Best practises for effective stock management
Understanding Stock Control
What is stock control?
Stock Control involves taking into consideration the products you purchase or sell while doing business. This can be monitoring the levels of stock you have on hand, ordering more when you run low, and tracking where each item is stored.
What is effective stock control?
Effective Stock Control is always having the right amount of stock on hand, so you never miss a sale. You’ve forecast exactly the amount you need for the next quarter, and won’t run out.
However, that doesn’t mean ordering more stock than is needed – keeping too much stock means losing money by sitting on products you can’t sell.
Why is effective stock control important for small business owners?
If missing a sale or sitting on too many products isn’t important enough – here’s two reasons why taking control of your stock management is important to keep your business growing:
Becoming a lean business
If you haven’t heard of the term ‘lean business’ before, it simply means maximising value and minimising waste.
Managing stock effectively is key to staying lean – don’t overstock when demand is low, or go out of stock when demand ramps up.
Done correctly, you could see massive growth and expand from a small to medium size business if you manage stock right.
Keep a healthy cashflow
By keeping stock levels balanced, you will always have money going into and out of your business.
You’ll be sending cash to your creditors for more stock and receiving cash as soon as your debtors pay for an order they’ve made.
Again, by freeing up capital, you gain the freedom to start investing in other areas of your business.
Now that we know why effective stock control is important – let’s look at some tools to keep on top of your stock levels, such as the Stock Position and Stock Reorder reports available in most inventory/accounting software.
What is a stock position report?
Your Stock position is how stock levels are split between free stock and stock on order. The stock position report will combine your stock management, sales and purchasing activities into one report – giving you a clear picture on what’s coming in, what’s going out, and how much stock you have left over.
What is the stock reorder report?
The Stock Reorder report builds on the Stock Position Report with additional fields – typically, these include the minimum stock level for each product and your reorder quantity. This is useful when you’ve had an increase in sales and want a quick look at what products should be reordered.
Stock reorder report example
in Thrive Accounting Software’s version of the report below, you’ll find the minimum stock level and reorder quantity, with an additional field – the Suggested Order amount.
If we look at the first product – 70005, Beetroot Juice – we see the stock level has fallen below the reorder level of 150, due to an increase in Sales. Therefore, Thrive has a Suggested Order amount of 110 products to meet demand.
How to manually conduct a stock take
Several accounting systems, such as Thrive Accounting Software, include Stock Take functionality, to make counting and adjusting stock quick and simple. If your system doesn’t include such functionality, follow these steps:
- Start by recording your current stock levels in your inventory management system. Thrive automatically creates a snapshot of your inventory levels when you start a new stock take.
- Ensure the following information is on your snapshot:
- Product code
- Stock location
- stock level
- The time at which the count took place.
- Begin your stock count for each product on the shop floor, or in storage. You can do this by hand, or using electronic scanners that allow data entry.
- Review the differences in stock levels between each product, before and after your stock count. If you’ve recorded your stock count in Excel,
Thrive allows you to import your count as a .CSV file and compare the count against your Stock Take snapshot. - Finally, go through and make adjustments for each product based on the change in stock level.
If you have hundreds of products, where stock adjustments for every product could take hours – consider generating your stock adjustments using Thrive. You can generate an adjustment to update the stock levels of every product in your stock count – with just one click.
Best practises for effective stock management
It may seem daunting wondering where to start improving your stock control – but these best practises can help get you started:
Be proactive and forecast stock movement
If you’re doing a promotional campaign or sale, ensure you order more product beforehand to account for increased demand. Predicting how much demand you’ll have for the entire year also prevents overspending on storage space, as you can order the exact amount you need and decide how much space to rent that year.
Setup minimum stock and reorder levels
In many accounting systems, your stock module comes with the ability to set a minimum stock level with how much should be reordered. This can reduce the need for manual calculation after each stock count.
As shown above in Thrive’s Stock Reorder Report, if the amount in stock goes below your minimum reorder level, Thrive will suggest how much to reorder – giving you a birds eye view on what products need reordering as you scan the report.
Build trust with your Suppliers
As covered in our Aged Creditors Guide, having a good relationship with suppliers is crucial to business success. You should aim to reorder stock and pay within your supplier credit terms. By introducing better cashflow and the possibility of discounts, it’s a win-win situation for you and your suppliers.
Download our free Cheat-Sheet for Mastering Stock Control
Looking for some tips to take back control of your stock management? Click the link below to download our guide. Plus, be signed up for Thrive in Five – a monthly email with 5 things to bring value to your business.
Download our Free Guide:
Take control of your stock management with Thrive
With stock takes that take days to finalise, or calculating the amount of stock to reorder to keep up with demand – inventory management can be a real hassle. Why not give Thrive’s fully integrated stock module a try? Thrive will put you back in control of stock, in several key ways:
Whether it’s a Sale or a Purchase, in-app or from a Shopify Order, Thrive fully integrates with your sales and purchasing activities. This gives you real-time, accurate insight into your stock levels, eliminating the need to manually update inventory after each transaction.
Let Thrive suggest how much stock you should reorder with the Stock Reorder Report. Based on what’s in stock versus on a sales or purchase order, Thrive checks if the leftover stock is above your minimum reorder levels. You can split the stock levels based on product groups or suppliers, with CSV and PDF exporting.
Streamline stock control with Thrive’s Stock Take functionality – take a snapshot to instantly store the current levels on the system. Once you’ve counted your stock, you can easily import your count from excel to quickly compare levels. Then generate stock adjustments in bulk, with one-click.
Lastly, you can manage pricing for multiple customers in Thrive by assigning stock to a Price List – with easy import and export, you can even edit price lists in bulk using excel.
Request a demo today and see how Thrive accounting software can transform your stock management, streamline your operations, and boost your business’s efficiency. The Thrive team will be delighted to showcase all its features and benefits that make Thrive the ultimate solution for efficient stock control.
