Chances are that when you started out in business, you did not have a formal way of handling your accounting books, taking orders, tracking inventory or any other daily business task.But as the company expanded, you realized that you could not leave company data stuck in your head.You need a formal system, if you want to be profitable in the future.If you want to have a successful company that continues to grow on a yearly basis, then you must set these things in place.
You have to get an inventory system and determine the type.Will you settle upon perpetual or periodic?Quite naturally, each one will have both good and bad features.The real difference between the two is how they are updated.The perpetual inventory system has information that is updated constantly.But, the periodic inventory system is not updated until there is a new physical count done.But, this article will talk about the periodic inventory system.
Periodic inventory is only updated after a certain amount of time.Normally, this is around inventory time.Companies manually count their inventory on a weekly, monthly, bi-yearly or even yearly basis.This means that in terms of the books, the information is not regularly updated.The records do not change, even when the product is shipped or received.Although this is a definite con of using a periodic system, it is something that many first time business owners are willing to endure.
With the periodic system, you don't have to purchase a pricey inventory management software package.This is because information is not updated when product is ordered, received or shipped.Yes, sales are being made, but your inventory system is not updated until the next physical inventory count.This could be a week, months or even a year before your records are updated to reflect the correct inventory amount.
A small company might find this beneficial.But, if you have been in business for a while, then this system might not be for your company.You will need a full fledge system that is capable of keeping track of your inventory in real time.
Quite naturally the biggest benefit is that you won't have expensive upfront costs for an inventory management software system. You might be able to get away with using only an excel spreadsheet.You will not be required to feed information into a database.
However, there are flaws to this system.First, the inventory is never accurate.It is hard to track sales.The system will not be updated until the next formal physical inventory count.This can become very stressful if you have a large company that has a lot of business transactions.
Simply put, it is good to have an inventory system.But, only you can decide which one is suitable for your company.
You have to get an inventory system and determine the type.Will you settle upon perpetual or periodic?Quite naturally, each one will have both good and bad features.The real difference between the two is how they are updated.The perpetual inventory system has information that is updated constantly.But, the periodic inventory system is not updated until there is a new physical count done.But, this article will talk about the periodic inventory system.
Periodic inventory is only updated after a certain amount of time.Normally, this is around inventory time.Companies manually count their inventory on a weekly, monthly, bi-yearly or even yearly basis.This means that in terms of the books, the information is not regularly updated.The records do not change, even when the product is shipped or received.Although this is a definite con of using a periodic system, it is something that many first time business owners are willing to endure.
With the periodic system, you don't have to purchase a pricey inventory management software package.This is because information is not updated when product is ordered, received or shipped.Yes, sales are being made, but your inventory system is not updated until the next physical inventory count.This could be a week, months or even a year before your records are updated to reflect the correct inventory amount.
A small company might find this beneficial.But, if you have been in business for a while, then this system might not be for your company.You will need a full fledge system that is capable of keeping track of your inventory in real time.
Quite naturally the biggest benefit is that you won't have expensive upfront costs for an inventory management software system. You might be able to get away with using only an excel spreadsheet.You will not be required to feed information into a database.
However, there are flaws to this system.First, the inventory is never accurate.It is hard to track sales.The system will not be updated until the next formal physical inventory count.This can become very stressful if you have a large company that has a lot of business transactions.
Simply put, it is good to have an inventory system.But, only you can decide which one is suitable for your company.
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