10 Reasons why you should use a PROFESSIONAL inventory service
1. A PHYSICAL INVENTORY IS REQUIRED BY LAW
Perpetual or Book Inventories – You may figure the cost of goods on hand with perpetual or book inventories if you use sound accounting practices.
Physical Inventories – You must take a physical inventory at reasonable intervals and the book figure for inventory must be adjusted to agree with actual inventory.
–From the: “Tax Guide for Small Business IRS Publication 334
Always check your individual situation with your accountant. However, if you are audited, will you be able to present acceptable proof of a physical inventory?
2. Time is money
Taking the actual inventory is one thing, but how much time is spent in planning the inventory? You must plan the inventory date, decide to keep the store open and do the inventory without inconveniencing the customer, or close for the day and lose sales. Of course, you could work your people after hours at time and a half.
If open, do you hire extra people or simply have the clerk interrupt his counting to wait on customers? Who is going to consolidate the figures, apply discounts and verify the totals? How long will this take?
WHEN YOU ADD UP THE NUMBERS, IT ALWAYS PAYS TO HIRE A PROFESSIONAL INVENTORY SERVICE !
3. Professional Inventory Services do the work during regular store hours
The task is accomplished much faster than could be done by in-store personnel. There is no disruption of store routine and there is practically zero inconvenience to the customer. Further, the professionals do their job so quickly that there is little variance between sales and deliveries.
THIS MEANS THAT THE STORE MANAGER AND THEIR EMPLOYEES CAN CONCENTRATE ON THE CUSTOMERS AND REGULAR STORE ROUTINES WHICH IS WHAT THEY WERE HIRED TO DO!
4. Inventory decision making must be based on reliable facts
A professional inventory service will mail, e-mail or fax a completed inventory report in the exact format you need within three to five business days. You will not be kept waiting for inventory data for several weeks. Further, you will know that the inventory format is, except for individual store differences, the same for all other stores in your field.
You will not have to wonder how other companies conduct inventories.
5. CONTROLS AND PROCEDURES
Obviously, store personnel are not experienced nor trained to carefully follow the important controls and procedures that must be used to conduct an accurate inventory.
Training people to follow time-tested procedures to insure that every location and every item is properly accounted for can be an expensive undertaking. Professional inventory crews have done hundreds, if not thousands of inventories like yours and know and understand the importance of adhering to tight controls and procedures.
6. Shrinkage…Shrinkage…Shrinkage !!!
It may not happen to you but the majority of “shrinkage” is caused by employees, not by shoplifting (although they certainly take a toll!) It is well documented that shrinkage, dependent upon the type of store, averages 2% or more of inventory. That’s $2,000 for a store with $100,000 inventory.
This is the principle reason why a book inventory, in lieu of a physical inventory, is not a sound business practice, and also why it may not be wise to have employees count merchandise.
A professional inventory service will tell you what you actually have and such a service can actually deter employee shrinkage.
7. CONFIDENCE OF ACCURACY
It is in the best self-interest of professional inventory services to conduct the most accurate inventory possible. Professional inventory services cannot survive without satisfied clients and repeat clients. Stores cannot survive without accurate financial data and repeat customers. Anyone can make a mistake, but reputable professional inventory services guarantee an accurate inventory. Reputable services will conduct another inventory if the client has reason to believe the report is not correct within acceptable parameters.
8. YOUR STORE IS UNIQUE!
Since your needs may differ from other stores a professional service can “customize” your inventory. The simplest and most economical inventory is to count merchandise at retail by location. However, many inventories can be designed to separate merchandise into as many categories as the store may wish.
A store may want 50 or 60 breakdowns or categories of merchandise, some of which is to be counted at net, and further listed by 30 or 40 distinct locations.
The store may also wish the inventory service to identify “seasonal merchandise in storage”, count lottery tickets and so on.
YOUR STORE IS UNIQUE AND YOU ARE GIVEN THE OPPORTUNITY TO CREATE A FORMAT THAT IS BEST SUITED FOR YOUR BUSINESS. YOU DO NOT HAVE TO LIVE WITH A REPORT THAT REALLY DOES NOT FIT YOUR NEEDS.
9. FINANCIAL INSTITUTES USUALLY DEMAND AUDITED DATA
Banks, insurance companies, and other institutions who lend, guarantee, or insure property usually insist on third party financial data gathered and consolidated using commonly-accepted accounting procedures. While you may not need the services of a lender at this time, you probably will at a later date. Hopefully, you will need to borrow money to expand your business.
It would be prudent to have inventories conducted by a professional inventory company at least once each year.
10. ECONOMY
The cost of a professional inventory is one of the few remaining “bargains” that exist in the business world. As a business manager, you are undoubtedly aware of the cost of service that you must engage. When you consider that a professional inventory service…
1. Sets up your inventory schedule at your convenience.
2. Organizes trained inventory counters.
3. Drives miles to arrive at your store at the time you select.
4. Counts all the merchandise in your store quickly and accurately in the format that you established without disturbing customers, and…
5. Gives you a complete report within three to five business days.
6. Saves time for your accountant, bank, insurance company, and the state and federal internal revenue services.