What is the definition of a co...

What is the definition of a company inventory?

Inventory is an essential component of stock management, and therefore of supply management within a company. The proper execution of inventory influences the company's purchases, as well as all financial decisions. Implementing a company's inventory goes far beyond mere accounting and administrative formalities.

What does inventory consist of?

The term inventory refers to the process of counting the goods stored within the company. Whether these are components used in the manufacture of products or items that will be sold directly, inventory provides a snapshot at a specific point in time. Those responsible for inventory will therefore record the goods that have not yet been sold, as well as all the raw materials purchased by the company.

From an accounting perspective, it allows for the recording, identification, and valuation of each item. While inventory management ensures the company's supply of goods, inventory allows for the control of assets.

Logistical Organization of Inventory

To implement inventory, organization is key. Establishing common rules helps avoid errors when counting merchandise. For example, you can create a map of the sites where inventories will be carried out and designate managers for each site. Also, simply choose a counting direction to avoid recording the same items multiple times.

Recounting is also essential to verify the inventory and prevent errors.

The data collected during the inventory is then entered into business management software. When an ERP solution is used, all this information is centralized in a database that can be used at various levels (preparation of accounting statements, tax returns, etc.).

When to Conduct an Inventory?

It is essential to conduct an inventory at least once a year. Depending on the size of the company, its activity, and the volume of goods involved, inventory is conducted more or less regularly.

Whether continuous or annual, there is no general rule regarding the frequency of inventories. It is up to company management to determine the most appropriate method with the relevant teams.

However, it is certain that continuous inventory management provides greater accuracy and reliability in the data used for purchasing and supply management. In this respect, the choice of inventory periods is crucial for the company's strategy.

Inventory: a legal obligation for your company

Any business that buys and resells goods, or that purchases raw materials, is required to conduct an inventory. It must be comprehensive in order to accurately reflect the company's assets in the financial statements filed at the end of each fiscal year.

The inventory ledger is one of the mandatory accounting records that a company must maintain. This method only applies to accounting periods created before January 1, 2016. It lists assets and liabilities.

Inventory management does not replace physical inventory.

A physical inventory must be carried out at least once a year. Inventory management, on the other hand, provides an overview of the condition of goods and the supply level using professional tools. Inventory management software is based on recorded sales and purchases. It is an essential platform for managing the company. Conducting an inventory is important for the company's accounting. Stocks are recorded accurately and comprehensively in order to calculate assets.

Best inventory management solution for you

Solution for anticipating and ensuring the reliability of physical stock and inventories