Clarity on Your Year-End Inventory Count

Hi there,

Most growing product businesses run on what the system says is in stock: Shopify, your 3PL, your inventory app. Over a year, that number drifts. A mis-scan here, a damaged return there, a few units that quietly disappear. Nobody notices until it becomes a problem.

That's why a full physical count, at least once a year, matters. It's the one day you swap "what the system says" for "what's actually on the shelf." And that number does a lot of work:

• It sets your real profit. Your ending inventory decides your cost of goods sold (COGS, what the products you sold actually cost you) for the whole year.
• It shows where stock is slipping away, so you can fix the process and not just the number.
• It gives your CPA, your lender or a future buyer a balance sheet they can trust.

Skip it, and every margin, reorder and cash decision you make next year starts from a guess.

This week's tip: plan your year-end count in November

The count itself isn't the hard part. The planning is. Block 30 minutes this week and lock in five things:

1. Pick your count date and cutoff. Choose the day (December 31 or the closest quiet day) and a clear cutoff time. Anything received or shipped after the cutoff belongs to next year.
2. Clean up before you count. Receive what's sitting on the dock, close out stale purchase orders, and set damaged or obsolete stock aside so it's counted separately.
3. Count in pairs, without the system number. One person counts, one records, and neither sees what the system says should be there. That's called a blind count, and it keeps the numbers honest.
4. Get a real count from your 3PL. If your stock is in a 3PL warehouse, email your account manager now and ask for a physical count as of your cutoff date (or at least an inventory snapshot report), with units in receiving, damaged or on hold listed separately. Ask about any count fee up front. Selling through Amazon FBA? Pull the Inventory Ledger report for December 31 instead.
5. Reconcile and book the difference. Compare the count to your inventory system and your books, look into any big gaps, then post one adjustment so your balance sheet matches what's really on the shelf.

If you'd like a second set of eyes on your count plan, or your books and inventory haven't matched in a while, just reach out and tell me where you're stuck. Or book a Free Books Review and we'll look at it together.

Book a Free Books Review

Talk soon,
Ben
Vertical Financials | Financial Clarity for Growing Businesses