If your business manages inventory, you already know that the end of each year brings an important process. You have the perfect opportunity to audit your entire inventory, tracking everything you have in stock and comparing it to what your official inventory shows. Doing this helps you easily track your own daily procedures, including identifying how much theft and loss you suffer each year. It’s an essential part of maintaining a healthy business. But not every business can conduct this inventory at the end of December or beginning of January, especially if the holiday season makes the workload impossible. When that happens, you’ll need to do something called a roll back audit, which lets you disregard any sales that happened after your end date so that you can get the full-year’s inventory count you need.
Choose a Cutoff Date
The first step in conducting a roll back audit is to choose an end date for your year. This doesn’t have to be Dec. 31. It can be Nov. 30, Dec. 1, or even June 30 if you prefer a July 1-to-June 30 year. No matter what date you choose, you’ll want your audit to be as clean as possible, which means that you’ll need to take a firm stance on keeping anything purchased and sold after that date completely separate. With today’s technology, your inventory software should be able to manage this easily.
Once you’ve set your inventory end date and properly segregated your inventory, you’ll also need to take a look at any invoices you’ve received and sent after that date. During this part of the process, you may also want to double-check your segregated inventory to make sure everything that has been set aside was received after that date. Put a plan in place to make sure the inventory happens quickly to avoid complicating this year’s sales any more than necessary. This may mean having everyone come in early on a Sunday morning or designating one employee to handle your inventory audit while everyone else maintains normal operations. You may also consider hiring an inventory company to bring a team of inventory counters to your business to expedite the count.
Research Any Discrepancies
Unfortunately, even with a process in place, you’ll eventually find that things don’t always match up. Often this is a result of shrinkage, whether an item was damaged or was stolen and never marked as such in your inventory. These numbers are important because they give you an overview of how many products are disappearing off shelves over the course of a year. This information can also help you take action to monitor these losses moving forward.