What are inventory adjustments?

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If your business or company offers products to its customers, it is imperative to manage the accounting of the items in the warehouse. With this, you will not only have greater control of your inventory of items, but you can develop a commercial operation optimally.

If you are interested in this topic, we encourage you to read our article where, in a brief and simple way, we want to share what you should keep in mind.

What is an inventory adjustment?

An inventory adjustment is an accounting modification; either decrease or increase from the process of entry or exit of items in a warehouse. Its main purpose is to control the goods and products stored.

It usually occurs as a result of a physical count process of the items in stock.

Whenever an inventory modification is made, we must make clear the reason indicated for which the adjustment was made. You can do this by assigning a code according to the nature of the adjustment you need to make.

To do this, it is very useful to have inventory reports to support the process. If you need help to do it know the options offered by InnovaCommerce TPV

Something very important to keep in mind is that when you decide to perform a physical count of the items in your warehouse or warehouse; no other activity should be developed in parallel, this will ensure the integrity and transparency of the process.

When is an inventory adjustment performed?

There are many situations in which an inventory adjustment is recommended. Here are the most common cases:

  • When your company or business has a product, registered in your system, in poor condition and you decide to remove it from the warehouse.
  • When thefts occur and you suffer losses of items that alter their total quantity.
  • When stock movements are made.
  • It can also happen that once a load of goods has been received, there are errors by the staff when classifying or even miscounting the goods, which will lead to the wrong entry of their physical entry into the warehouse.
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What is clear is that, in any case , inventory adjustments are useful to control and organize our accounting . In addition, this process facilitates business operations and properly drives the sale of products

Types of inventory adjustments:

There are three types of inventory adjustments you can make. We let you know what they are:

Quantity increase: Increases the available quantity of the item, which also influences its total value; using the current average cost or the cost price that goes into the adjustment.

Quantity reduction: Decreases the available quantity of a product; adjusting its total value using the average cost.

Revaluation: Unlike the previous ones, it adjusts the average cost and the total value of the item; without changing the quantity on hand.

To make inventory adjustments, it is advisable to resort to the support of a management software or the help of professionals. It is a complex process and must be done thoroughly.

We hope you found our article useful. Feel free to share it on social networks, see you soon!

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