Whether you run an automobile shop, a restaurant or any business taking note of annual inventory is essential to close the annual book of the business while planning for the year ahead. In this article, we will guide you on the lengths and breadths of annual inventory, its importance and how you can perform it. 

We’ll also help you understand how Inventory management Software can be of great assistance while performing year-end inventory and the difference between cycle count and annual inventory.  Investing in Inventory Management Software can be of great help while performing annual inventory counts.

What is The Annual Inventory Count?

An annual inventory count is the representation of available inventory value a business has on hand at the year’s end. It is a comprehensive review of different types of inventory of the business annually. However, businesses are required to hold operations to perform the annual edit to ensure actual data is recorded and there is no error meanwhile. 

By enclosing a close look at your company’s inventory you will get a better overview of the tax requirements, and provide accurate data and corporate audits to the accounting team. It also allows you to access the data directly which is required to detect any inventory shrinkage and predict what inventory may be required in another year. While you are organised to grab your inventory for the coming, you must check the QB app which is the Best Inventory Management Software allowing businesses to manage their inventory, CRM and ledger among others. 

Although most businesses perform physical inventory one can always go for software inventory management as it reduces human error and provides actual data. 

What’s the difference between year-end inventory and an inventory cycle count?

An annual inventory is performed at the year-end to verify the inventory at hand with the inventory management system. While an inventory cycle count audits only a tiny portion of the inventory from time to time. Over time cycle count can audit everything that you have got your hands on, but can take the whole year. However, an inventory cycle count can never give you a comprehensive list of everything you have in your hands in real-time. 

Annual inventory usually requires you to cease your business operations and shift your focus on counting every single thing available. Whereas an inventory cycle count can easily operate during regular business hours. Both have their advantages and disadvantages that can be chosen by businesses according to their needs and requirements. However, if you are looking for a trustworthy Inventory Management Solution, then you must try your hands on QueBuster. 

Methods for doing a year-end inventory count

Performing an inventory count is quite simple. There are three different ways to perform annual inventory count- the FIFO method,  the weighted average (or average cost) method and the  LIFO method. Each method has its benefits and tends to solve for ending inventory through a popular inventory calculation. The basic formula is- New Inventory Value +  Beginning Inventory Value – Cost of Goods Sold. 

All three methods will provide unlike values for the equation—and will produce different results. Inventory Management Software allows businesses to cut down their time managing their inventory and outperforms annual inventory counts.

First-in, first-out method (FIFO)

The FIFO accounting method works on the principle of first received basis. It will consume or sell the inventory it has received first. In other words, the remaining inventory of the business will contain the stock it has acquired recently.

The FIFO accounting method is preferable during inflation. It is so because older prices of goods can be applied to whatever is being sold at the moment thereby yielding higher net income for the business which further increases the value of ending inventory. 

Last in, first-out method (LIFO) 

Unlike FIFO, the LIFO accounting method calls for businesses to sell their most recent purchases and goods sooner. This further means that the older, or  lower cost of the previous purchase will be reported under “remaining inventory.”

Using LIFO usually lowers the net income but can turn out to be pretty advantageous on tax returns when prices are at their peak. Inventory Management System has inbuilt features that allow you to keep a track of your inventory.

Average cost method

The average cost method, also known as the weighted average method, uses the weighted average of all paid inventory within a given time to determine the cost of sold goods and the present inventory value.

The average cost method is considered to be the easiest and the cheapest way to perform annual inventory and is also less prone to manipulation. It is considered a popular choice among businesses that have tons of inventory and don’t mind to keep a track of it. 

However, your accountant can help you determine which annual inventory accounting method is best for your business. Opting for Best POS Software can be a feasible option. You can try your hands on QueueBuster which helps you to manage your inventory effortlessly through their platform.  You can download the QB app and get started with all your inventory needs by signing up.  

How inventory management software can help?

POS Solution enables businesses to keep a track of their inventory using advanced technology and automation tools. Not only inventory software helps to streamline annual inventory counts but also inventory cycle counts and transactions happening every single day. 

When selecting Inventory Management Software, look for products that offer impulsive features that are designed to save you time, money, and energy. Ideally, the product or the software should be:

• Remotely accessible– at any time, any place; even across the country
• Should have the capability to function as an app on phones, computers and tablets.
• Isn’t a pain to set up and can be easily drafted.
• An inbuilt Inventory Management App that can be moulded enough according to the needs of the business.
• Contains ready-to-scan barcodes and QR codes accessible through phone cameras. QBuster is one such app that allows users with bar codes. 
• Effortless to sync with the external barcode or QR scanners
• Has the ability to generate custom-made barcodes and QR for any unlabeled stock.
• Is capable of a multi-user interface that allows customizable access to the entire team of vendors and suppliers. 
• Has the capability to create data-rich, shareable reports that decode the knick-knacks of inventory.
• Has the ability to analyse when the product is out of stock or expiring products and can send alerts accordingly. 
• Able to create histories of the items for you to understand who had what and when

Small Business Can Gain Big With Inventory Management Software

By now you must have gathered useful insights on how you can perform annual inventory count and their types. Analysing annual inventory counts can also help you to predict next year’s demand. Not only does this boost future sales of the business but also instils confidence and a pathway to move forward in a particular direction.

Ready to experience how the Best Inventory Management Software can make your end-of-year audit much easier?  Book a free DEMO now with QueueBuster.