The end of the year is near, and many online retailers are already dreading the upcoming annual inventory. The inventory is often time-consuming and stressful, especially considering the upcoming Christmas shopping season. For this reason, in the following guest article our partner Pickware will show you which legally sound inventory options you have to make this process as efficient and easy for you as possible.
Legal framework conditions
As an online retailer, you are required to carry out an inventory of all your business’s assets and debts as part of your year-end closing at least once a year. The inventory is therefore a physical or accounting entry of all the integral parts in your company’s operation. Usually, the biggest challenge for retailers is to record and evaluate the entire stock. These are the points that must be considered from the legal point of view:
The law requires that merchants and companies subject to accounting requirements must carry out an inventory once a year.
The inventory must be carried out within a certain period of time, in most cases by the balance sheet date.
Each item with a value exceeding €60.00 must be recorded separately.
The exact amount, the value and a specific description must be recorded for each item.
Types of inventory
The legal framework prescribes various procedures for carrying out the inventory. Choosing the right inventory type and the use of a merchandise management solution have a decisive influence on the effort associated with the inventory and should be considered carefully.
The entire inventory is physically recorded on a specific date, usually that of the annual balance sheet on 31 December. The annual inventory can be carried out up to ten days before or after the balance sheet date. For you, this means that a complete list of all existing goods must be created within a few days. Merchandise management is not mandatory for this method, but it could be helpful.
- The amount of goods to be recorded is usually small after the Christmas shopping season
- The inventory needs to be done only once a year
- The error rate is high due to the entire inventory being completed at once
- You are bound to a fixed date
- The time expenditure is very high and often results in interruption to the daily business
- There may be costs for additional staff required to do the extra work
- Differences in stocks don’t become apparent until year-end closing
The inventory is recorded independently and continuously during the entire fiscal year. Each item must be physically recorded once a year, and the inventory can then be projected by recording the incoming and outgoing goods on the balance sheet date. Merchandise management is essential for this method.
- You always have an overview of your actual stocks and can detect shortages early
- You are flexible in terms of time and can use idle periods for doing the inventory
- You can do the inventory when the stock is at the lowest, keeping the effort as little as possible
- With the right system, you can carry out the inventory parallel to the daily business
- You need to schedule regular time slots for the inventory
Other types of inventory
In addition to the annual inventory and the perpetual inventory, there are also the less widely used options of the rescheduled inventory and inventory sampling. In the case of the rescheduled inventory, the annual inventory can be carried out up to three months before or up to two months after the balance sheet date. Here too, all stocks are bundled and then offset against the incoming and the outgoing goods by the actual balance sheet date. In inventory sampling, the stocks are only recorded on a random basis and the remaining stock is then calculated on this basis using a mathematical statistics method. However, this type is more suitable for very large stocks of low-value items and thus tends not to be useful for online retailers.
By comparing the inventory methods, it becomes clear that the perpetual inventory is associated with less stress and effort for most online retailers, especially if they use a merchandise management system in combination with barcode-based process control.
Process-controlled inventory with Pickware
Shopware ERP and WMS powered by Pickware, combined with mobile barcode scanners, provide ultimate support both during the annual and perpetual inventory. For example, the inventory mode of Pickware WMS also offers filters that only display the items for which the last inventory took place a defined period of time ago. You can also use the scanner to record items or storage locations in a time-saving and error-free manner, which allows you to carry out the inventory for each item step-by-step and with complete flexibility. In addition, you have the option of doing a blind inventory, in which case the expected current stock is not displayed, or you can also display the expected stock and then just confirm it if required. The inventory entries are available directly in the backend and can be easily downloaded in full compliance with the law for the year-end closing. Perpetual inventory in particular offers real-time synchronisation since several employees can carry out the inventory in the warehouse parallel to the order picking.