Mitigating the Impact of Inventory Adjustments

Mitigating the Impact of Inventory Adjustments


We've all been through it.  Looking high and low for an item that the computer says is there, but you just can't find it.  There are many reasons that there could be a discrepancy. Properly making adjustments to inventory will not only help you maintain good records and reduce wasted time but also keep your staff's sanity in check.

So what are some of the reasons that you would have to adjust inventory anyways?

  • Theft
  • Store use
  • Damaged Goods
  • Improper receiving
  • Staff training gaps

What's the impact of not dealing with discrepancies?

For starters customer perception.  Customers aren't very forgiving when it comes to delays due to internal process. Your front line staff has to deal with the customer and also get frustrated with repeatedly looking for items that just aren't there.  

You can also have the opposite problem where the computer says you have zero and there's actually 5.  Now if this was a popular item, how many sales have you missed?

Corrections also have an equal and opposite correction:  For example the cashier rings out the item incorrectly and you make the correction, but did you consider the item that was actually given to the customer?

An Ounce of Prevention...

While you can't eliminate all inventory adjustments, you can minimize how many occur in the first place. Implementing barcode scanning keeps you accurate, see our recent blog post about barcoding in your business. Solid receiving, cashier routines and return procedures keep everyone in the know.

How can you offset some of these costs?

  • Depending upon what industry you are in there may be ways to re-coop some of these losses. 
  • Is the item still salable? Think scratch and dent, or plants that need extra love.
  • Can you get a Return Merchandise Authorization from the manufacturer for this item?
  • What about donating to a good cause?
  • How about Recycling or Re-purposing the item?


Using System Five help to keep your inventory accurate in these instances?

  1. images/Windward Webinars.jpgManual Adjustment
  2. Inventory Transfer
  3. Physical Inventory Count
  4. Transfer

Full instructions can be found in the wiki article below.

Visit this Wiki Article Sign up for this Windward Webinar

*It is important to understand the financial impact and even tax implications of the method you use to adjust inventory to make the correction for inventory management purposes.  For example there are some instances where "scanned out stolen" and "store use" could be used as a tax deduction. Also, there are a number of ways to handle damaged goods depending upon the circumstances.  Please consult with your accountant for guidance. 


Windward Clients on a maintenance contract or subscription have resources available to them.  You can use searchable self-help, the wiki article mentioned earlier, or courses in the Windward Learning Academy 

Call your account manager if you prefer to choose a plan from our Professional Services Catalog for advanced help with inventory reconciliation in your business.

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