Real Inventory. Real Numbers.

It is the process of matching what you physically hold against what your records say you hold. Physical counts are organized and stock on hand recorded, then compared with inventory records, sales data, purchase orders and warehouse records. Where the two do not agree, the variance is investigated rather than simply written off.

Common causes are stock losses, theft and data entry errors. Each variance is identified and investigated to establish which it is, because the fix differs: a recording error needs correcting in the system, while genuine shrinkage points to a weakness in how stock is received, stored, tracked or issued.

More often than once a year, and in portions. Cycle counting programs regularly verify parts of the inventory on a rolling basis, which stops large discrepancies accumulating and supports ongoing accuracy between full counts. Continuous reconciliation helps maintain real-time inventory integrity and reduces year-end surprises.

FIFO (first in, first out), LIFO (last in, first out), weighted average or another appropriate method. Whichever is applied, the valuation needs to be correct and inventory items properly classified for financial reporting, so the figures comply with IFRS (International Financial Reporting Standards) and local regulations.

Adjustments are reviewed and processed with proper documentation and an audit trail behind each one, and they must comply with accounting standards and your internal policies. That documentation is the part businesses tend to skip, and it is exactly what is asked for when a material inventory adjustment shows up in the accounts.

Detailed reports covering stock aging, turnover rates and stock valuation. Read together they show how efficiently inventory is working: what is moving, what is not, and where cash is tied up. Slow-moving stock stands out clearly, which is what makes the reports useful for procurement decisions and not just for the accounts.