WHY TAKE INVENTORY AT THE START OF THE YEAR?
Finally! The holiday madness is over and it’s time to sit back, count our money and relax. There’s nothing else daunting on the horizon. Oh, wait… I forgot about inventory time! Who had the bright idea to take inventory right behind the busiest time of year!? It may be a bit of a challenge, but inventory is important to every business and can play a leading role in helping you to stop shoplifting.
While not an official retail rule, generally speaking, lots of retailers take inventory in January/February each year. There’s a few reasons why this is a good idea, and understanding why this can save you a lot of heart ache. See inventory time as a chance to hit the “reset” button on your stock and a chance to fix any big issues that may have gone un-noticed throughout the year.
It may seem like we could give ourselves some time to catch our breath, right? Taking inventory actually makes sense right now. You probably have a little extra help in the store thanks to your holiday temps. Those extra sets of hands can really make a difference when you’re trying to count everything in the store.
Your store is at its lowest stock position
I was out shopping with my wife and she made a comment about how “empty” the store we were in looked. It was week or two after Christmas and I remarked that they must have had a good season. Why count in the spring, when you can put your hands on less product and still get the job done?
Taxes and valuation
I’m not an accountant and I don’t have an in-depth knowledge of tax codes across the country. With that being said, most localities assess an inventory tax, with every company having to report at certain times of the year the inventory they have in the building, thus creating their tax burden on inventory. Obviously if you take your inventory right after the holiday, you have less on-hand, affecting your tax burden. Inventory, or more specifically, the cost of goods sold, is one indicator of overall business health. Taking inventory allows you to determine this number. This can be used against any business loans. This may not be the case everywhere, so I would always consult with your CPA regarding inventory tax and any financial decisions.
Employee theft (and external theft too!)
Another great advantage of taking inventory this time of year is to identify any patterns of employee theft that may have occurred during your busiest time of the year. Employee theft cases usually peak around November and December. Waiting too long before noticing may hinder your chances of recovering any loss money. Think about it. You take inventory in mid-January. You notice that a shipment of electronics worth $10,000 went missing in December. You find the manifest, run the security cameras and find a warehouse worker bring the shipment to his car. Chances of getting paid back are pretty high. Same situation, but you take inventory in July, for example. Shipping manifests may have gotten purged and your CCTV doesn’t hold recordings for that long. The warehouse worker goes undetected and steals even more from you. Pretty obvious, right? The same holds true for your external theft problems. Taking inventory now let’s you identify your patterns of loss, and ultimately let you better react to those patters, which will help stop shoplifting.
While it may seem daunting to start the inventory process so soon after such a busy time, trust me when I tell you that it’s absolutely for the best. Get it done now, while you’re light on product, heavy on help and before all your spring shipments start hitting the docks. You’ll clean up the holiday inventory, help stop shoplifting by identifying any patterns of theft/fraud, and clean your on hand counts to ensure you’re in the absolute best stock position. Happy counting!
For more information about Employee Theft, contact us or call 1.770.426.0547.