Inventory records and systems

Inventory systems allow you to keep track of and make sure your inventory records are up-to-date. There are two main types of inventory systems that you can choose for your business; either a periodic or perpetual inventory system.

Periodic inventory systems

In a periodic inventory system, you don’t update your inventory records straight after your inventory levels change. Instead, you update them time-to-time by physically counting your inventory by doing a stocktake.

Advantages of periodic inventory systems include:

  • being less costly to set up than a perpetual inventory system
  • less reliance on electricity than a perpetual inventory system
  • sometimes being cheaper to run.

Perpetual inventory systems

In a perpetual inventory system, you update your inventory records straight away after your inventory levels change. Perpetual inventory systems are often electronic and use a point-of-sale system.

Some benefits of perpetual inventory systems are:

  • better detection of theft
  • more up-to-date records.

Inventory records

Inventory records are records of what inventory your business has and how much it’s worth. It’s a good idea to update inventory records when your inventory changes, such as when:

  • inventory goes obsolete, such as throwing out a movie ticket because the tickets are for a movie that is no longer in cinemas
  • inventory has been lost or stolen
  • inventory has perished, such as milk that went out-of-date
  • the value of inventory has changed, such as the resale value of a diamond ring going down
  • you buy new inventory from a supplier
  • you sell inventory to a customer.

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