Balancing Your Inventory

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Using LiquorPOS to Balance Inventory

One of the prime functions of your LiquorPOS point-of-sale system is to manage your inventory.  LiquorPOS is a perpetual inventory system where the ins and outs are recorded live and you should always know exactly what you have on hand and have the needed insight into your inventory position, your ordering costs, your carrying costs and even costs associated with shortages.  But what I want to talk about today is how to verify that all those ins and outs are legitimate, the security aspect of balancing your inventory, which is usually your most significant business asset.

If every sale, return or receiving session is recorded in LiquorPOS, you should find that the value of your inventory at the beginning of the month plus the product received minus the sales should equal the value at the end of the month.  If it does not, there needs to be an explanation which will usually be in the data.

It helps to begin with accurate inventory numbers but even if the numbers are not accurate, the formula will still tell you if inventory is going ‘astray’.  Here’s how to run the reports.

On the first business day of every month, go to Reports/Inventory/Inventory Valuation and print the report.  On the last business day of every month, go to Reports/Sales/Quantities Sold and print that report for the past month – remembering to exclude things not sold so the report is not too long.  The numbers should balance from month to month and if they do, or you can explain the variances, you can be reasonably certain your inventory is not leaving the store in an unauthorized manner!

If you are running our EncorePOS Dashboard, you can run the Inventory Valuation Report which breaks down the inventory by Type and can quickly help you narrow down just where in the inventory you are looking for the difference.

What if it doesn’t balance:  Looking at the Inventory Valuation Reports from month to month, the number of items should balance as well as the Unit Cost.  If they don’t, and there is a legitimate reason, the answer will be in the data.

Was the Inventory Quantity on Hand Field edited: Print the Item Edit Log for the month in question – go to File/Security/Item Edit Log – and search the report for QOH Edits.  Each of those will affect the ending balance so you may find your answer there.  The number of units edited should equal the difference in the number of units between the beginning Valuation + plus purchases – minus sales and the beginning Valuation for the next month.

Was the Unit Cost Field edited:  On the same Item Edit Log, search for Unit Cost edits.  The Unit Cost field is an average weighted number LiquorPOS develops over time as you use the system the receive.  Editing this field manually will affect the overall cost of your inventory.

Was an item deleted:  Obviously, deleting an item entirely from the database will influence the formula and these deletes will also appear on the Item Edit Log.

Did a receiving error create an issue:  An accidental change of case quantity or wildly incorrect cost can affect the formula.  Running a Gross Margin or Markup report will show you the outliers.  Go to Reports/Inventory and either Gross Margin or Gross Markup and run reports to display items with either a very high or a very low margin – you will get a list of items which may have an incorrect case quantity, sell quantity or cost entered.  They will still sell at the correct price but when sold they may be affecting quantity on hand or COGS incorrectly.

Still don’t find the culprit:  Frankly, if there is a legitimate answer to the failure to balance it will almost always be in the Item Edit Log or a receiving issue.  From here you want to begin to take a closer look at the Exception Report—go to Reports/Closeouts/Exception Log – to get a sense of what is happening at the registers and at what times of day.  Voids and deletes at the Sales Screen are a part of any normal business day but excessive use of these keys should be investigated if your inventory is not balancing.

While this process is only part of securing your store and will not catch every misadventure that might occur to your inventory, it will ensure that significant amounts of product are not disappearing and limit losses.  If none of the above explains numbers that don’t add up, we can help you take a deeper dive into the data and find out what might be happening in your store!

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