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When Is a Physical Inventory Usually Taken?

If you’ve ever worked in a retail setting, chances are you’ve been through the process of taking physical inventory. For those who haven’t, it can be a bit of a mystery as to when this event actually takes place. But when is a physical inventory usually taken? It’s a common question with no easy answer as there are several factors that can influence when a physical inventory is taken. In this blog post, we’ll explore some of these factors and offer some insight into when is a physical inventory usually taken.

What Is a Physical Inventory Count?

A physical inventory count is a crucial part of any business that relies on stocking physical goods. By taking the time to count your inventory at set intervals, you can ensure that your books are accurate and up-to-date. This process can also help you identify any issues with your inventory levels, such as overstocking or understocking.

Learn how to perform a physical inventory count, including all the steps, methods and processes involved. Also, get expert advice on how to plan your inventory counts, as well as helpful calendar and metric resources.

Types of Physical Inventory

Inventory tracking can be different for every business.

Tracking the inventory process of a business involves keeping tabs on goods that have already been produced, as well as those that are still in the process of being made. The type of business will determine what types of items need to be accounted for.

There are various types of physical inventories that are accounted for throughout the supply chain. These include on-hand inventory, work-in-progress inventory, and finished goods inventory.

Raw Materials

Raw materials are unprocessed materials or primary commodities that a manufacturer uses to produce finished products. These materials are often used in large quantities and must be replenished frequently to keep production moving.

Raw materials can be sold, such as flour, sugar and fabric, which can all be used to create goods.

Work-In-Process Inventory

WIP is any part or product that’s still in the process of being assembled.

A water bottle that is still being designed from metal and plastics is considered work in progress. The painting and packing processes still need to be completed before the bottles can be sold.

Finished Goods

Finished goods are the products that are ready to be sold. This term differs from raw material, which is the raw product that is used to make other products.

Your finished goods are your most important asset when selling online.

Finished goods are items that are ready to be sold to the end user. They have been received by the manufacture or supplier and stored until they are ready to be fulfilled.

By keeping track of your finished products, you can track your inventory from when it arrives to when it’s shipped out. This helps you ensure that you always have enough products in stock for when customers need them.

MRO Supplies in Ecommerce Bookkeeping

MRO stands for Maintenance, Repair, and Operations. These are the supplies and equipment used to keep production facilities running efficiently.

There are some items that are considered inventory for ecommerce bookkeeping, but they are not usually incorporated into the products being produced.

MRO supply costs are considered indirect expenses, and while they don’t necessarily impact sales, they can still affect gross profits.

When is a physical inventory usually taken?

To decide between counting your stock on a continual basis or only periodically, you must decide between perpetual and periodic processes.

The main advantage of a periodic inventory system is that it requires less work to maintain than a perpetual system. On the other hand, a perpetual inventory system provides more accurate records of what is in stock at any given time. You should also consider the size of your business and how often you receive shipments when deciding how often to count physical inventory. If you have a large inventory and receive shipments frequently, you will need to count more often than if you have a small inventory that is not replenished as often.

This real-time method of tracking your inventory is ideal for businesses that deal with a lot of products. It automatically updates your stock count, so you always know what’s in stock.

When it comes to inventory counting physically, the best time to do so is when it best suits you and your team. However, for the most accurate results, it’s always best to consult an accountant.

Methods for Counting Physical Inventory

To accurately track your inventory, you can either manually do it or automate it. Whichever method you choose, consistency is key.

There are many ways to count physical inventory, but the most common are as follows: -by quantity -by weight -by value

Manual Inventory Completion

Manually completing your inventory means manually recording the quantities of items you have on hand. This can be a tedious process, but it is necessary to keep an accurate record of your stock.

To calculate your inventory turnover, you will need to first figure out the value of your total current stock. Then, subtract the value of what you should have based on recent sales and orders. Divide this number by the total value of what you currently have.

Manual counting of stock can be time-consuming and prone to error, which can affect your bottom line.

eg. , you may have sold the missing inventory). If your inventory accuracy is low, it is important to always consult your sales receipts and records. This can help reveal any discrepancies (e.g., you may have sold the missing inventory).

If you’ve sold the missing inventory, you may have to reimburse your customer.

Electronic Counting Becomes The New Standard

Retailers are adopting new inventory management systems.

Tracking data through electronic means is the best way to keep track of what products you have in stock. By collecting data as inventory items move through your supply line, you can ensure that you’re always prepared.

An inventory management software or ERP inventory system can help businesses keep track of ecommerce inventory levels, locations of items, and performance of each SKU over time. This information is crucial for optimizing inventory and ensuring that goods are available when needed.

Electronic counting is a method of managing inventory that enables accurate real-time physical inventory counts. This makes it easier to optimize inventory and avoid stock-outs.

Brands are opting for electronic methods of tracking their inventories because it makes optimizing their stock levels easier. This saves them time, money, and effort.

Cycle Counting

Cycle counts are a type of manual inventory management method in which inventory is split into more manageable sub-segments (such as location) and physically counted on a recurring basis. This helps to ensure that inventory records are accurate and up-to-date.

, monthly) than slower-moving goods (e. g. , quarterly). To conduct cycle counts, businesses can use the “ABC classification” method. This method consists of faster-moving goods being counted more frequently, such as monthly, while slower-moving goods are counted less often, such as daily or hourly, quarterly or annually.

Some inventory items are more important than others and are given priority, but the final decision comes down to what will have the biggest impact on revenue.

The method of cycle counts is the most efficient way to manage your stockroom. By breaking your physical inventory counts into more manageable chunks, you can reduce the total operational cost of your operation.

Issues With Physical Inventory Count

When this happens, they risk poor customer service. One of the biggest problems that companies face when conducting physical inventories is the amount of time and resources that it takes. Some companies have to shut down parts or all operations in order to perform their physical inventory, which can lead to poor service and low customer satisfaction.

Some small businesses do not have the manpower to do a complete inventory of their stock.

Discrepancies in a physical inventory count are often the result of inaccurate recording by internal or temporary staff members. This can include incorrect classification of items, or failing to record new items correctly.

There are some things staff members should not count during the physical inventory. Any known returns If any of the above occur, it can throw off your physical inventory count.


There’s no easy answer to the question of when is a physical inventory usually taken. It can depend on several factors, such as the type of business, the size of the inventory, and even the time of year. In general, though, most businesses will take their physical inventory at least once a year.