Year-end stock take before the December shut-down: a checklist

Most South African factories and workshops close for two or three weeks over December. For many of them it is also the one time in the year when the floor is quiet enough to count everything properly. A stock take done well gives you a closing stock figure you can trust, a clean start in January, and a clear picture of where stock went missing. Done badly, it gives you a number that looks precise and is wrong, and you carry that mistake into the new year.

This is the checklist I would work through, in order, from about four weeks out.

PDFDownload the checklist to printOne A4 page with tick boxes, initials and a sign-off, to check off with a pen

Four weeks before: decide what you are counting and why

Pick the date and stick to it. Count on the last working day, or the first morning of the shut-down, when nothing is moving. A count taken while goods are still being received and dispatched is a count of a moving target.

Decide who counts and who checks. The person who looks after the stock should not be the only person counting it. Put two people on each area: one counts, one writes. A manager or your bookkeeper reviews the differences afterwards.

Know what the count is for. Your closing stock feeds straight into your profit for the year. At the financial year-end, trading stock has to be valued at cost, written down where it has lost value (damaged, obsolete or slow-moving stock). If your financial year ends in February rather than December, the December count is still worth doing: it is a full rehearsal, and it shows you the problems while there is time to fix them. Your accountant can tell you which count they will use.

Two weeks before: get the paperwork straight

Process everything that is outstanding. Every goods received note, every delivery note and every return should be captured before the count. A delivery that arrived but was never booked in will show up as "extra" stock on the day and send you looking for a mistake that is not there.

Close or finish open job cards where you can. Materials issued to a job and still sitting on the bench are a classic source of confusion. Either finish the job, or make sure everyone knows that stock is work in progress and is counted separately.

Deal with returnable containers and customer stock. Gas cylinders, pallets, drums and anything you are holding for a customer are not your stock. Mark them and keep them out of the count.

Tidy the floor. Put things back where they belong, label anything that is unlabelled, and set aside damaged or obsolete stock in one place. It is far easier to write off a box of damaged fittings that sits in a marked corner than to argue about it on the day.

The week before: prepare the count sheets

Count by location, not by product list. Walk the store the way it is laid out: aisle, shelf, bin. A count sheet that follows a product list sends people back and forth across the store and things get missed.

Use a blind count. The sheet should show what to count and in which unit, but not how many the system expects. People who can see the expected number tend to find it.

Say the unit on every line. "Edging tape: metres". "Board: sheets". "Tube: bars". Most counting mistakes are unit mistakes, not counting mistakes.

On the day

Freeze the stock. Nothing comes in and nothing goes out until the count is finished. If something has to move, write it down.

Take a snapshot of the system figures at the start. You want to compare each count with what the books said at the moment the count started, not with a figure that kept changing while people were counting.

Count, write, and initial each sheet. When an area is done, the counter signs the sheet. Spot-check a few lines in each area with a second person.

After the count: review before you change anything

Look only at the differences. If the count matches, there is nothing to discuss. Spend the time on the lines that do not match.

Give every difference a reason. Counting error, damage, loss or theft, or stock that was found. "We don't know" is a valid answer, but it should be a decision, not a default. The reasons are what tell you where to tighten up next year.

Value the differences at cost. A shortage of two hinges is a few rand. A shortage of half a pallet of resin is not. Sort by value and investigate from the top.

Have someone sign it off, and only then adjust the stock. Keep the count sheets and the list of differences with your year-end papers.

How we do it in Vali

We built the stock take in Vali around exactly this checklist, because we kept seeing the same mistakes on paper and in spreadsheets.

• The count sheet is printed per location, an aisle with its shelves and bins, as a blind count with the unit to count in on every line.
• Starting a stock take keeps a snapshot of the quantities at that moment, so each count is compared with that snapshot.
• You type in what was counted, and Vali shows only the lines that differ, each valued at the item's cost.
• Every difference gets a reason and a note, and the stock take moves to review so a manager can check it before anything changes.
• Applying the counts creates one stock adjustment, posted to the ledger, and voiding that adjustment puts the stock back if something was wrong.

There is a three-minute video of a full count on our videos page: watch the stock take video

The checklist, as a timeline

PDFDownload the checklist to printOne A4 page with tick boxes, initials and a sign-off, to check off with a pen

If you start four weeks out, the count itself is the easy part. The work is in getting the paperwork and the floor ready, so that on the day you only have to count.