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by Shaz K

What Is the Purpose of an Inventory Audit?

Wednesday 19, Aug 2020

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An inventory audit is an analytical procedure that compares the actual quantity of goods in stock with your financial records. Although counting all your stock items might sound overwhelming, with the right tools, an inventory audit can be efficient and valuable—not stressful. But what is the purpose of an audit? And how can you simplify the process?

What Is the Purpose of an Inventory Audit?

The purpose of an inventory audit is to ensure accuracy between actual stock quantity and your financial records. Regular inventory audits increase understanding of your stock flow, help you calculate profits and losses accurately, and keep your business running smoothly.

Although you can audit inventory manually, the time commitment can discourage you from doing it regularly—or at all. But you don’t have to miss out on the benefits. You can automate the process and increase accuracy with inventory management software. Inventory software minimizes time spent on auditing so you can establish a regular schedule that you won’t dread.

Benefits of an Inventory Audit

Three benefits of an inventory audit include identifying what’s missing, assessing overall status, and improving your budget.

  • Know what’s missing – As you compare physical counts with your records, you can identify which items are missing. If you find consistent inventory shrinkage with supplies or products, further investigation can help determine if they were lost, stolen, damaged, or discarded. And you can take action to stop shrinkage.
  • Assess overall inventory status – Regular inventory audits will reveal if specific items are consistently understocked. You can also identify which supplies aren’t being used and are taking up storage space. 
  • Budget better – When you understand which items you need the most, it’s easy to budget more efficiently. Regular inventory audits prevent wasting money on buying and storing products that are always in surplus. Audits help you determine if you need to discontinue surplus items and redirect funds to goods that are frequent stockouts.

How to Do an Inventory Audit Quickly

You can audit inventory quickly by making a checklist of items, counting them, and comparing quantities to your financial records. Take note of stock shortages and obsolete items. Consider scheduling audits of smaller groups of supplies or products instead of your full inventory. If you automate the process using QR codes or barcodes and inventory management software, you can get a real-time status of your inventory and speed up the audit.

How Inventory Management Software Can Help

Inventory management software helps you keep inventory current and manage audit findings more efficiently. Custom categories in Sortly’s inventory control software make it easy to audit groups of items, see if they are sold, in use, or on loan, and view their storage location.

Saves time and money

When you barcode or QR code your stock and add it to inventory software, the software will display item quantity with just a single scan. No physical counting is required. And you can set minimum quantities for low stock alerts and date reminders for ordering more supplies. Your audit will help you determine which items you use the least so you can avoid overstocking them.

Doesn’t interrupt your business flow

Many companies that perform audits might close for a limited time to physically count stock. It doesn’t have to be this way. If you keep your inventory management software current, then you can scan items, see the quantity and types of shingles in stock, and compare them to invoices or other records. The efficiency can help you quickly address issues with missing items and identify which products are consistently lost, damaged, or stolen.

Sortly Makes Inventory Auditing Easier

A custom PDF of an inventory report is generated.

Sortly inventory management software is easy to learn and use. With the inventory app, you can:

  • Access your secure, cloud-based inventory anytime, anywhere, from a desktop, laptop, or mobile device
  • Share access with your team or customers and set limits on what they can view or edit  
  • Generate QR codes or barcodes and print labels 
  • Scan barcodes or QR codes with a mobile device or Bluetooth scanner for a quick search to find stock items
  • Create custom folders for each business location, warehouse, or storage area and make it easy to audit individual locations
  • View item quantities and their total value for comparison with invoices or other records during an inventory audit
  • Much, much more!

Simplify inventory auditing with Sortly. Start your free, 14-day trial today.

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