Physical Inventory Count Instructions

by Lisa Mooney

Inventory is a primary concern for just about all small businesses. Physical inventory is especially important if you deal in selling products. You must have an accurate count of all items so you know what you have on hand to offer customers and fill orders. Even if you deal strictly in service, an inventory of office equipment and other materials is essential to your business so that you have what you need when it's needed.

Written Guidelines

Establish written guidelines for how to count physical items in your inventory. Decide on a description for each article which can include a stock number or another identifying code. Write a clear step-by-step method for taking counts. Use such statements as "Section off area to be inventoried with clear markers which you remove after counts" and "Count items from left to right and top to bottom." Detail proper handling of materials if necessary and clearly state that items should not be removed, but returned to their original positions. The Simplestudies website says the ways of recording your inventory include putting information on index cards, using log sheets or investing in bar code readers which can directly input barcoded items into an electronic database when you use the readers to scan each item. Prepare a copy of your inventory guidelines for each person in your small business. Amend instructions as needed.

Oral Instructions

While your employees will appreciate and need a written copy of inventory procedures, you need to give verbal directives, as well. Mike Kraus of Dun and Bradstreet Credibility Corp, advises you to completely explain the exact process by which your business's physical inventory will be taken. Speak to your employees as a group so each person will know his assigned role. You might organize it so one person counts items while another records the counts in a log book. Your type of business will determine if you need to conduct separate inventories for stock, office equipment, supplies or other materials. It is necessary to make sure everyone doing the counting uses the same consistent guidelines. Do frequent audits of each person's counts to check for accuracy and address any issues that arise.

Individual Counts

Many items in your small-business inventory will be able to be counted individually. For example, you might count 300 envelopes, five printers, one copier and 10 books of stamps. Instructions for counting individual items is, therefore, essentially straightforward. You can decide how detailed you need to be when performing and recording the items in your inventory. For instance, you might decide to count a grand total of labels you business has on hand or you could sort and count these items by size or color. Make sure your specific instructions are clear and detailed.

By Weight

Some of your companies' items might be too small and numerous to making individual counts feasible. For example, if your business is a small hardware shop, you are likely to have a multitude of tiny screws, nails and bolts. For this type of inventory you will likely get piece counts by a different method than counting each item. Instead, place a small number of items, say 20 on a scale to determine the weight of these collective pieces. If example, the 20 pieces weigh 20 grams then you know each piece weighs one gram. You can then weight the entire stock on a scale, divide it by the weight of one piece and you will be able to determine how many individual pieces you have.

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