An inventory management system helps you keep track of the inventory of your business. This is important for budgeting, planning, and filing and paying taxes.
When you use an inventory management system you enter all the items you have in stock—either when you receive items you’ve ordered to resell, or items that you’ve made in-house.
The system will then keep track of how much you sell along the way so that you know when to order or create new items.
It’s a great idea to integrate the inventory management system with your invoicing software and accounting software. When you do that, your inventory management system will automatically reduce stock when you invoice your clients, or bookkeep sales income and payments in your accounts.
Benefits of inventory management software
First and foremost, it makes it easier to keep track of stock. This will help you improve profitability and run a more efficient company.
When you have inventory management software it’s easy to get a good overview of sales figures and your peak sales periods, and based on that, be able to anticipate demand. You can then ensure that you have items available in stock when needed.
You’ll also be able to identify your best selling products, as well as products which might be underperforming. And you can make sure that you’re not tying up too much money in a large inventory—not to mention the money you’ll be spending on storage. If this is the case, you might want to increase your sales and marketing efforts, rather than producing or ordering more stock.
The inventory management software can also be set up to alert you when stock is low, or even to automatically reorder stock that you’ve approved.
You have to do a stock count once a year
Once a year you have to do an inventory count, to check that the items you have in stock matches up with what you have in your system. Items can get lost, damaged, or stolen throughout the year, and it’s important that you update your system to accurately reflect what you own.
The stock numbers will impact the value of your company, the budgeting and planning, as well as the amount of tax you have to pay.