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Choosing the Right Inventory Counting Method


With the end of the year only a couple of weeks away, it may be time to consider taking stock of your inventory via one of two primary counting methods.

1.       Cycle Counting

Cycle counts are performed by counting a small amount of inventory each day.  By counting a small percentage of your total inventory each day, you will be able to cycle through all inventory on hand on a regular basis.  Each day, when a cycle count is complete, the inventory records are adjusted for quantity counted.  This continual, regular counting process results in overall smaller adjustments to the accounting records and, if consistently performed, higher levels of inventory accuracy.

2.       Year-end Counting

A year-end inventory count requires your company to stop shipments, both into and out of the warehouse, while your inventory is counted.  This process can be time consuming, but allows you to obtain an accurate record of the inventory that you have on hand at the end of the year.  This process requires less overall time than cycle counting, but concentrates that time all at one fixed point (year-end).

Inventory Counting Benefits:

In addition to improving the accuracy of your accounting records, counting your inventory provides useful information about what you have on hand and whether that inventory has been moving regularly.  Additionally, if your company is planning to have an audit performed on its financial statements, an auditor is required to observe and provide test counts of inventory.

If you have any questions about inventory counts or would like assistance in choosing a methodology, Berntson Porter & Company, PLLC is ready to assist you!  Contact your Berntson Porter representative at 425.454.7990.


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