How to do a stock take: preparation, counting and analysing discrepancies

Why a stock take matters

A stock system only knows about the movements entered into it. Goods damaged on the shelf, shipped by mistake, taken without paperwork or under-counted at receipt never show up. Over time the gap between the system and the shelf grows: sales promise items you do not have, and purchasing reorders items you already hold.

The goal is not just to make the numbers match. The real value lies in finding why they differ and closing the gap in the process. A corrected balance will drift again by the next count if the cause is left in place.

• Restore trust in stock levels so sales and purchasing decisions rest on real figures.
• Detect losses, theft and damaged goods in time.
• Document the accountability of the person responsible for the stock.
• Establish the actual value of inventory for financial reporting.

Preparation: half the result is decided here

In practice, most counting errors are made before count day, not during it. If the warehouse is untidy, paperwork is not posted and nobody knows who counts what, even a careful team will not get a reliable result.

• Issue a written count order: date, warehouse, count team and the product groups in scope.
• Post all receipts, issues, returns and transfers in the system before the count starts.
• Tidy the warehouse: keep each item in one place and flag opened boxes.
• Separate damaged, expired and customer-owned goods held in custody.
• Split the warehouse into zones and assign each zone to a specific pair of counters.
• Prepare barcode scanners, count sheets and labels in advance.

Count day: blind counts, two-person teams and cut-off

Cut-off is the most overlooked part of an inventory count. From the moment counting starts until it ends, nothing should come into or leave that warehouse. If operations cannot stop, keep goods received during the count aside and out of the count, and record every issue precisely. Otherwise the difference is calculated wrongly and you end up with shortages or surpluses that never existed.

In a blind count the counter cannot see the system balance. People who know the expected number tend to land close to it, or simply write it down when in doubt. Blind counts take longer, but the result is more honest.

With two-person teams, one person counts and the other records or checks. For high-value or sensitive items, an independent recount is worthwhile: positions that do not match the first count are recounted by a different pair.

• Count shelves in one direction, in sequence, and mark each location once counted.
• Count what is actually inside a box, not the number printed on it.
• Watch the unit of measure: mixing up boxes and pieces is the most common error.
• Record items found on the shelf that are missing from the system.

Analysing discrepancies and approving write-offs

Once counting is over, the temptation is to post every difference as an adjustment straight away. We recommend the opposite: explain first, then approve. Many differences are bookkeeping errors rather than real losses, and a few simple checks will find them.

Write-offs and write-ons should be posted only with approval from an authorised person. A report signed by the counter, the storekeeper and the manager is the basis for establishing accountability. Confirm the tax and accounting treatment of shortages, including how write-offs must be documented, with your accountant.

• A surplus on one item and a matching shortage on a similar item usually means they were mixed up.
• Check the last few days of paperwork: an unposted receipt or delivery may explain the gap.
• Check the unit of measure and the pack size.
• Recount large differences before approving them.
• Record a reason for each difference: damage, expiry, receiving error, unexplained loss.

How often should you count stock?

A full stock take covers the whole warehouse and usually requires stopping operations, so it is hard to do often. The alternative is cycle counting: each week a portion of the range is counted, so that every item is checked several times a year.

ABC analysis makes cycle counts easy to plan: high-value, fast-moving A items are counted more often, and cheap, slow-moving C items less often. In addition, hold an unscheduled count when the person responsible for the stock changes, when a serious mismatch appears or when theft is suspected. Check with your accountant which inventory counts are mandatory by law and when.

Common mistakes

• Counting while sales continue, without a defined cut-off.
• Showing counters the system balance.
• Letting one person count, record and approve the result alone.
• Writing off differences without a reason and then meeting the same gap on the same item again.
• Counting goods that are still in the warehouse but already sold or owned by a customer.
• Treating the stock take as a once-a-year event with no checks in between.

Stock counts in SBT CRM

In the Stock & Warehouse section of SBT CRM, a new count on the Stock count tab starts with the warehouse, date, counter, storekeeper and manager. The count is saved as a draft and balances do not change until it is approved. Counted quantities can be entered by hand, with a barcode scanner (each scan adds one) or through an Excel sheet; with Blind count ticked, the counter does not see the system figure on screen or in the Excel sheet. You can also print a blank count sheet without system balances for counting by hand.

The With difference filter shows only the items that do not match, which makes recounts and analysis easier. On Approve, the difference for each item is posted to the Movement log as an adjustment and can be filtered by the count number; an approved count cannot be changed or deleted. The count report is valued at sale or purchase price, shows surplus, shortage and net difference, and prints with Counted by, Storekeeper and Manager signature places. This module is available on the Business and Enterprise plans.

At SBT Consulting & Solutions, we build the stock take into the control process rather than treating it as a one-off event. Put the preparation, cut-off and approval rules in writing, and run the count in SBT CRM so that every difference leaves a trail.

Frequently asked questions

How do you do a stock take in a warehouse?

Post all paperwork and tidy the warehouse first, then stop movements during the count, count items using blind, two-person counts, analyse the differences and confirm the result with a signed report.

What is a blind count?

In a blind count the counter does not see the system balance and records only what is on the shelf. This reduces the risk of adjusting the count to the expected figure and gives a more honest result.

What is the difference between a full stock take and cycle counting?

A full stock take counts the entire warehouse at once and usually pauses operations. Cycle counting checks part of the range each time, with high-value and fast-moving items counted more often.

How is a stock shortage written off?

After the cause has been investigated, the shortage is documented with approval from an authorised person and a signed report. Ask your accountant about the tax and accounting implications.