If you happen to work with anything relating to accounting and inventory, you just KNOW that anything that directly affects your inventory, will affect how you keep track of it and the inventory reconciliation. But, are you really aware of what are the transactions that affect your inventory and your warehouse warehouse management system?
Some people might think it’s only when you buy and sell inventory that it is affected but there is more to it.
In this post I will show you each and every transaction that directly affects inventory so that you are not taken off guard when something in your inventory is not the way it should be.
The obvious one: Bills and everything you purchase
Everything you buy to replenish your inventory will obviously represent more inventory for you so, anything you bill, afterwards will increase your inventory count.
This is something important to businesses where not all their inventory is placed in just one warehouse but many of them. The company’s accounting department must keep track of all inventory whenever new items are purchased and you need to make sure that as the inventory is reconciled, they are keeping track of where each unit is.
This is as obvious as the last transaction I mentioned. Why? You sell; your inventory count goes down. So, you need to make sure every sale and billed units are being kept in check since if these transactions are not registered, you will definitely have discrepancies in your inventory.
So picture this. You have your inventory count. You sell an item and therefore your inventory count decreases. But, what happens when there is a customer return? The obvious answer is that the inventory count goes back to the way it was before making that sale as the item being returned is going back to your warehouse or to wherever you are keeping your inventory.
Now this one you need to be a bit careful with. Why? You don’t need for something to happen to your inventory to make an inventory adjustment. You cannot just deliberately adjust inventory just so that everything is matching and pretty. You actually need to have a reason to make these adjustments so you better be careful.