By Dr. Dorcas Muthoni
The beauty of many SMEs is that they do not require complicated inventory tracking systems. But despite this advantage many small and medium businesses score poorly when it comes to keeping accurate records of inventory, meaning that more often than not, business owners are unable to properly track what has been purchased, sold or discarded.
The fact that the majority of SMEs are not automated also means that there are no systems to quickly trace stock, discover discrepancies in inventory or alert business owners when it is time to replenish stock. The use of simple handwritten cash sale receipts and stock books also poses a risk to businesses as they are sometimes not reflective of real sales and often there are no copies, making it hard to track stock.
One may argue that due to the nature and size of most SMEs keeping track of inventory is easy since there are fewer people involved in the business. However, the risk occasioned by not tracking inventory is an inefficient business resulting in reduced profits, loss-making or even employee theft.
Keeping track of inventory goes beyond knowing how many items you have in stock: it requires that you also know the monetary value of this stock. To do this and assuming no returns have occurred one can use simple calculations such as:
Opening stock + Purchases – Sales = Closing stock
Net Profit = Sales – Direct Expenses
Yesterday’s closing stock = today’s opening stock
The calculations are easy, but what is even easier is having them computed by an inventory management tool. With advancements in technology, SMEs are now, more than ever, in a better position to automate their businesses using tailor-made SME-focussed systems. There are systems that can allow business owners to update their inventory real-time by as goods are checked out using a Point of Sale (PoS) software at the till. This enables the business owner to automatically track stock levels as sales or purchases are made from anywhere anytime using their mobile phones.
While many factors contribute to the success of a business, no business can exist without goods/services to trade-in. So take charge of your inventory today and enjoy the benefits that come with accurate stock-tracking.
CEO/Founder, OpenBusiness Africa