What is A Physical Inventory?
Physical inventory is the the actual count of products and items a business stocks and/or owns. The general process includes seperating, counting and recording the count of all items in the inventory. Physical inventories are a tedious but necessary task and provides several benefits for your business.
What Are The Benefits of Physical Inventories?
There are many ways a physical inventory will benefit your company. One of the most important benefits is that it reconciles and adjusts the current written records. Property records and any related financial documents should match up with the physical stock on hand. In our work, we find that often time, the client’s recorded inventory does not match up with their actual inventory. They tend to have more or less than they thought. A physical inventory can shed light on possible malfunctions within the company. There could be a theft issue, or a proper recording issue, or maybe the current policy, practices and procedures are no longer working for the company and need to be updated.
Performing a physical inventory also enables you to properly evaluate your stock and can help you determine information such as;
- what is still useful,
- how much longer will it be useful for,
- what equipment needs to be replaced and
- how soon it will need to be replaced.
A quality physical inventory can help you forecast future personal property expenses.
What Personal Property Should Be Accounted For in A Physical Inventory
Every company has property listed on their balance sheets under the Property, plant, equipment line. Each company also makes the decision to write-off something as an expense or set a capitalization threshold. The captalization threshold can be anything from $400 – $500 and up. The property that has a capitalization threshold is what should be included in your physical inventory Examples of personal property that should usually be accounted for in a physical inventory is:
- Plants/Operations
- Computer and Office Equipment
- Raw Materials
- Manufacturing and Factory Equipment
- Server Rooms
- IT Assets
- Vehicle Fleets
- Healthcare and hospital equipment
- Warehouse inventories
How Often Should A Physical Inventory Be Conducted?
There are several times a physical inventory should be conducted.
- A new comptroller or Chief Financial Officer takes over.
- A new company is acquired.
- Companies complete a merger.
- A company implements a new software system to manage fixed assets
- A company hasn’t had a physical inventory in awhile
- When assesing taxes
How Does Assertive Conduct A Physical Inventory?
At Assertive, we have specially trained teams and project managers that have managed inventory counts for some of the largest companies in a variety of industries. Using our PeerFA system, we are able to help corporations from all over the world track and control their fixed assets, capital equipment, and warehouse inventories through bar-code technology. We have helped our clients save as much as $2,000,000 with the use of our PeerFA barcode tech.
Conduct Your Physical Inventories Today
If you’re looking for a business that conducts physical inventories or for software to help you conduct your physical inventory in-house call Assertive Industries today at 1800-982-0342 or contact us at info@assertiveindustries.com for more information.