Most Common Mistakes to Avoid When Doing Inventory Accounting

Going into business is always a complicated matter. Many key factors can make or break your business. Whether you are just starting or are a veteran in the field, you will make mistakes. Sometimes, these mistakes can be costly. It is always good to review your status to verify that nothing is out of order, especially when doing inventory accounting. Below is a list of some of the most common accounting for inventory mistakes that you should avoid.

1. Improperly measured inventory

Make sure you implement a constant review of your inventory and reconcile your accounting books with your bank accounts, kind of like balancing a checkbook but on a higher scale. Tracking your finance purchases and confirming that they match up with your bank statements will keep you on the right track. If something is amiss, you will catch it at the beginning rather than trying to figure out the problem weeks or months later.

2. Improper Training of Employees

Humans are not error-free, yet employees are a key to your success in any business. Making sure they have the correct resources and information to do their job to the best of their abilities can prevent a lot of errors. Train employees thoroughly to prevent data entry mishaps, budgeting mistakes, and other errors. When everyone is on the same page and has all the tools needed for their jobs, business runs much smoother.

3. Planning

Going into something without a plan will most likely result in chaos. To avoid any catastrophes, plan a budget and stick with it. Have an idea and outline of what exactly you are looking to get and/or do and then follow these guidelines. This will help you stay within your budget and prevent problems with overhead expenses. Plan for what you can do and then follow that plan to the best of your abilities.

4. Automation

With lack of automation, your business might be under the impression that a shipment will be delivered tomorrow morning at 9am, but in all reality it is not going to be there until the following day around 1pm. Being up to date with automation improves accuracy and speeds up the order processing, which leads to fewer errors in inventory accounting. Knowing when inventory is actually arriving helps keep your books in line and also keeps the customer happy.

5. Separating Business and Personal Accounts

While some might see this as a glaringly obvious mistake, it is not uncommon for new businesses to intertwine these areas. Doing business separately is critical and can help avoid many costly mistakes. Especially in the beginning, when the stakes are so high, do not allow this to pull you under. Keep separate books and do not overlap one with the other.

Ready to get your inventory accounting on point?

Now that you know which mistakes to avoid while working on your inventory accounting, it is time to put it into action. Cover all your bases by first recognizing what you may be doing incorrectly and setting that wrong right. Also, continuously check your system to make sure all inventory accounting is on track. Professional Accounting for You has other tools and marketing plans to help you get on track. Check out our website for further helpful information.