You probably did not have a formal way of handling business when you first began. However, as time passed by and the company continued to grow, you realized that you could no longer run your company in an efficient manner by just scribbling down notes on a sheet of paper or by keeping valuable information in your head.If you want to continue growing your business, now is the time to take your business to the next level.You must create a formal system.
You have to get an inventory system and determine the type.Will you settle upon perpetual or periodic?Quite naturally, each one will have both good and bad features.The real difference between the two is how they are updated.The perpetual inventory system has information that is updated constantly.But, the periodic inventory system is not updated until there is a new physical count done.But, this article will talk about the periodic inventory system.
Periodic inventory is only updated after a certain amount of time.Normally, this is around inventory time.Companies manually count their inventory on a weekly, monthly, bi-yearly or even yearly basis.This means that in terms of the books, the information is not regularly updated.The records do not change, even when the product is shipped or received.Although this is a definite con of using a periodic system, it is something that many first time business owners are willing to endure.
With the periodic system, you don't have to purchase a pricey inventory management software package.Info is not updated, so there is no use for it.Sales are being made, but you will not do an update until the next physical count.This might not happen until a year from now.
A smaller company might like this.But, if you have been in business for a while, then this system might not be for your company.You will need a full fledge system that is capable of keeping track of your inventory in real time.
The best benefit is that you will not dish out up front money on an inventory management software system. You could just use an excel spreadsheet.No, you will not have to consistently key information into the system, but this might become a hassle in the end.
However, there are flaws to this system.The main one is that you will never have an accurate inventory count.It will be hard to track inventory when sales are made.You will just update the system after a physical count.If the company has a lot of activitiy, this can be irritating.
Simply put, it is good to have an inventory system.But, only you can decide which one is suitable for your company.
You have to get an inventory system and determine the type.Will you settle upon perpetual or periodic?Quite naturally, each one will have both good and bad features.The real difference between the two is how they are updated.The perpetual inventory system has information that is updated constantly.But, the periodic inventory system is not updated until there is a new physical count done.But, this article will talk about the periodic inventory system.
Periodic inventory is only updated after a certain amount of time.Normally, this is around inventory time.Companies manually count their inventory on a weekly, monthly, bi-yearly or even yearly basis.This means that in terms of the books, the information is not regularly updated.The records do not change, even when the product is shipped or received.Although this is a definite con of using a periodic system, it is something that many first time business owners are willing to endure.
With the periodic system, you don't have to purchase a pricey inventory management software package.Info is not updated, so there is no use for it.Sales are being made, but you will not do an update until the next physical count.This might not happen until a year from now.
A smaller company might like this.But, if you have been in business for a while, then this system might not be for your company.You will need a full fledge system that is capable of keeping track of your inventory in real time.
The best benefit is that you will not dish out up front money on an inventory management software system. You could just use an excel spreadsheet.No, you will not have to consistently key information into the system, but this might become a hassle in the end.
However, there are flaws to this system.The main one is that you will never have an accurate inventory count.It will be hard to track inventory when sales are made.You will just update the system after a physical count.If the company has a lot of activitiy, this can be irritating.
Simply put, it is good to have an inventory system.But, only you can decide which one is suitable for your company.