How to Manage Your Stock Balances and Keep Accounts

Stock accounting and inventory management are critical competencies that every business has to have. It’s hard to control a large number of merchandise titles manually, and it takes too long, especially since every title has to be updated individually.

Every business owner stands to benefit handsomely from having these processes automated. Efficient management of warehouse stocks streamlines procurement and saves valuable time that can be devoted to other, more meaningful priorities.

So let’s see what it takes to set up automatic stock accounting with 2can.

What are stock balances?

Stock balances are goods remaining in stock in the warehouse and/or point of sale. Stock balances are composed of stock in trade and surpluses, which may build up when excessive quantities of goods were purchased or goods are not selling so well.

As stock balances build up, the business’s earnings will drop, for unsold goods are, in effect, frozen cash.

First of all, unsold stocks take up warehouse space. If you are renting warehouse space, excessive stocks mean higher rent payments. If you own your warehouse, unsold goods take up the space that other, potentially better-selling goods could use.

Second of all, most goods have a limited lifetime. The longer they sit in your warehouse, the less time is left for you to sell them. Expired goods will have to be discarded and the money you could have made if you sold them will go down the drain.

What is stock accounting?

Stock accounting is keeping records of all merchandise activity at the point of sale, such as how many items were procured, how many were sold, and how many are left in stock. Stock accounting is key to streamlined warehousing, keeping track of incoming and outgoing goods, book-keeping, and tax accounting. Stock accounting operations are to be performed on a daily basis.

You can keep stock records manually or by means of an automated system. In the former case, you enter incoming and sold goods data manually in some ledger. Automated accounting involves the use of some purpose-specific apps, which can be used online or downloaded to your computer.

Automated vs manual stock accounting

• Time investment. With automated accounting, you don’t have to fill any documents by hand, count the goods or keep records manually (sometimes this has to be done after hours). The role of the human factor is reduced overall: when keeping records manually, the clerk may accidentally miscalculate, forget to enter some data or write something illegibly. Any of these errors may cost the company in missed earnings.
• Market watch. Manual accounting makes it hard to promptly respond to changes in demand. You have to figure out manually which items sell better or worse, and you can only do this retroactively.
• Stock balances and shelf life. You have a harder time tracking these parameters with manual accounting. As regards stock balances, risks may not be so high to the business owner. When a customer cannot find an item they want in your store because it suddenly transpires that the item is out of stock, the customer will, at best, walk away this time to return later or, at worst, find another store where the item is in stock and start patronizing that store. Shelf life, however, is a more serious matter. When a customer catches an item precariously close to its ‘best before date in your store, complaints and refund claims may ensue. In the worst-case scenario, some customers can get poisoning by an expired product.
• Data submission to Accounting. With manual accounting, you have to submit data to Accounting every day. This may lead to error and data redundancy. Automation would eradicate this problem. The electronic accounting app will also generate tax returns and financial statements automatically. As you can see, automated stock accounting benefits the accountant as well as the cashier and the warehouse manager.

Automated Stock Accounting

• Requires the use of specialty software
• Gauges demand automatically
• Automatically sends out warnings when a product’s shelf life has ended or is about to end
• Sends documents and statements to Accounting and tax authorities automatically

Manual Stock Accounting

• Records of goods in stock and stock balances are entered manually into a ledger
• Demand gets calculated manually for each individual title
• Shelf life is controlled visually by the cashier, who physically checks item by item at the warehouse.
• Documents and statements are submitted manually to Accounting and tax authorities

So which stock accounting method would you go for?

The challenges of stock accounting tend to increase with the scale of business. If your business is not large and you fully trust your cashier and warehouse manager, manual accounting may be just right for you. But you know what, even if you have no hired staff and you are your own salesperson, cashier, and warehouse manager, you can still benefit from automation: at the very least it’ll save you precious time.

A micro business is an enterprise employing 15 or fewer staff, earning no more than RUB 120 mln annually. The need for automation makes itself felt already on this scale. When many people start working together, the probability of human error and irregularity will skyrocket unless the critical processes are automated. A larger business employing 16 or more needs automated stock accounting for sure, in order to speed up and streamline POS, warehouse, and book-keeping transactions.

Stock Accounting with 2can Solutions

The 2can Accounting module has all the functionality it takes to straighten out your inventories.

Key features of the 2can module:

• End-to-end stock accounting, covering both goods and services for multiple warehouses
• Sales records, including income, expenses, and even arrears
• Customer and counterparty transactions
• Automatic document printing
• An advanced accounts system
• Divided access for different user categories: warehouse staff, cash keepers, couriers, and management
• The option to sync with external small business services

With automated stock accounting in place, no shopper will ever add an item that’s not in stock to their cart. When a title sells out, it will be automatically hidden or its status will change to ‘out of stock’. With this feature, you will never again face the situation where a customer places a prepaid order only to discover that the item is not in stock.

How to set up stock accounting with 2can

Before commencing the use of the Accounting module, set up your business profile and take a good look at the system’s basic entities and interfaces. By setting up your business profile you are saving yourself loads of time going forward because from now on, all contract paperwork will be generated automatically.

The Accounting tab contains several function packs to assist you with automated stock accounting. The Transaction pack offers a choice of stock handling options, including goods in, sale, order placement, and removal or retirement of stock balances.

You get to select the POS (store or warehouse), supplier, or customer you are dealing with at the moment. The POS pack allows you, among other helpful features, to track stock balances at any specific POS.

To add a new merchandise title to the system, select Product Catalogue tab, click New Product in the top right-hand corner, and select the type of merchandise. Complete the fields and save. Specify your prices (purchase price, regular price, and discount price) in the Prices tab. Also indicate the applicable VAT rate.

To book goods into your warehouse, go to Transaction in the Accounting pack and select Goods In. Select the store you need in the Point of Sale pack. In this same pack, you can click a product title to specify how many items of this title you have received into your warehouse. Then click Accept, whereupon the product title will move to the Balances tab where you can track how many items are left.

To tag an item as ‘sold’, select the store of the sale in the Point of Sale pack, then select Sale in the Transaction pack. In the Balances tab, click the title you wish to offer for sale and specify the desired quantity and price.

How to enable stock management for 2can Shop

If you want to track stock balances on the 2can Shop, book the merchandise into your warehouse and enable stock balances tracking in the Shop master settings. When a title is no longer in stock, you have two options: either hide it in your catalog or tag it as ‘out of stock’.

With automated stock accounting in place, no shopper will ever add an item that’s not in stock to their cart. With this feature, you will never again face the situation where a customer places a prepaid order only to discover that the item is not in stock.

As you can see, stock accounting/balance management is no rocket science, certainly not when it’s automated. By having these processes automated, entrepreneurs make their life easier and free up time for more important matters.