Practical Internal Controls - Inventory

At a minimum, a business relying on inventory  for sales needs a daily inventory position and those records must be reconciled with the physical balances periodically. One recent example involves a company manufacturing large items of equipment. Until controls were strengthened there was evidence that equipment was produced was not always accounted for  and the risk on not collecting payment on certain sales transactions was high.

Normally the risk of unaccounted for sales would not appear high for high ticket items. However that is not always the case. The risk in this situation reinforces the importance of tracking a items of inventory.

Solutions can be practical and easy to implement. In the case of large equipment, we set up a specific identification tracking system - manually at first whereby all  items were either in stock or converted to a sale which was tracked through the deposit of cash in the company's bank account. In another example we developed a data base tracking  system for parts.

Inventory control  principles are fundamental and  have been in practice a long time. However, it is not uncommon to find companies with internal control problems related to inventory. Not addressing those problems can be very costly. 

My business (Exec Net Consulting www.ExecNetConsulting.com ) teaches clients how to improve the controls over inventory. That is the first step to improving inventory turnover and gross margin optimization.

My firms expertise spans numerous industries. Most of our experience is with retailers, manufacturers, and trucking companies. I have already developed a spin off of my main web site www.ExecNetConsulting.com  for the trucking industry. That site is www.TruckingCompanyConsultant.com  I have several  more  in development recognizing our expertise in a number of other industries. On the drawing board is a further breakdown of our retail expertise as it applies to drugstores, restaurants and apparel.

All the best,

Steve Pohlit, President

Exec Net Consulting

www.ExecNetConsulting.com

www.BuildCashProfits.com

www.TruckingCompanyConsultant.com