Inventory represents a current asset since a company typically intends to sell its finished goods within a short amount of time, typically a year. Inventory has to be physically counted or measured before it can be put on a balance sheet. Companies typically maintain sophisticated inventory management systems capable of tracking real-time inventory levels.
An inventory account typically consists of four separate categories:. Depending on the type of business or product being analyzed, a company will use various inventory management methods. There are other methods to analyze inventory. If a company frequently switches its method of inventory accounting without reasonable justification, it is likely its management is trying to paint a brighter picture of its business than what is true.
Frequent inventory write-offs can indicate a company's issues with selling its finished goods or inventory obsolescence. This can also raise red flags with a company's ability to stay competitive and manufacture products that appeal to consumers going forward. Electronic Code of Federal Regulations. Tools for Fundamental Analysis. Small Business. Company Profiles. Financial Ratios. Business Essentials. Actively scan device characteristics for identification. Use precise geolocation data.
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Multiple tracking modes Zoho Inventory offers two different types of stock tracking: physical stock and accounting stock.
Learn more about stock tracking modes Arrow. Serial number tracking From the moment you receive an item from your vendor or manufacture it yourself, you can track its progress using serial number tracking. Learn more about serial number tracking Arrow. Batch tracking In Zoho Inventory, you can add your items in batches and group similar items together. Learn more about batch tracking Arrow. Shipment tracking Once you've shipped your items, tracking them can be a tedious job.
Because honestly, a real-time system is overkill for some companies. That being said, not every inventory software offers real-time tracking—some are designed specifically for periodic inventory management. With cloud-based software, you and your employees can access and update your inventory tracking from anywhere. Plus, it can connect with barcode scanners and RFID scanners to record events as they happen.
That makes it easier to keep everyone in your business on the same page and ensure your system is as up-to-date as possible. Sure, you can manually track each item in your system every time you move it. But who has the time? Hardware like barcode scanners and RFID tags make the process simpler.
Instead of manually entering each item number into your software, you can simply scan it and move on. If just one employee scans shipment barcodes instead of item barcodes, it could wreak havoc throughout the rest of your system. Real-time management allows you to track individual items in your inventory in real time go figure, right? This gives you greater insight into the status of your inventory and stock levels across multiple warehouses.
However, real-time inventory management systems require more of a financial investment in the form of cloud-based software and scanning hardware. The cost of a real-time system may make it unfeasible for smaller businesses—and frankly, not every business needs to track inventory in real time. But if your company does a high volume of sales, sees regular fluctuations in customer demand, or conducts business across multiple locations or sales channels, a real-time inventory management system is well worth the investment.
Ready to get started? Check out our rankings of top cloud-based inventory management software to get the ball rolling. At Business. We don't guarantee that our suggestions will work best for each individual or business, so consider your unique needs when choosing products and services. By signing up, you agree to our Terms of Use and Privacy Policy.
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