Typically, business owners (Also see Accounting Tips That All Business Owners Should Know) will make a significant investment in the company’s inventories. If most of the inventories are raw materials, you, as the business owner (Also see How to Track the Expenses and the Benefits It Brings to Your Business), should monitor them to ensure that your production processes that require them will not be affected due to insufficient inputs. Hence, besides hiring an accounting firm in Johor Bahru to help you keep a good record of them, you need to implement various controls. The controls play a vital role in preventing theft and ensuring that the manufacturing process will not be forced to come to a halt as the company runs short of raw materials.
The controls that you should implement to track your inventories are as follows:
– Locking the warehouse
The most important and the easiest control for inventory is locking your warehouse. This means that you should lock the gate of your warehouse and only give permissions to authorised staff to enter the warehouse,
– Counting all inventories received
If your supplier told you that the number of products that they have sent is the same as the numbers stated on the delivery note, you should not just listen to them. Once you receive the inventories, you should ask your staff to count them before recording them. By doing so, your staff will not record the wrong numbers into your company’s inventory records.
– Checking all inventories received
You should ask your staff to check that all the inventories that the company has received are the correct ones and are not damaged. They should return all the items that failed to meet the company’s requirements right away. Also, do not forget to notify the staff responsible for accounts payable that he does not need to pay for the returned inventories.
– Keeping your inventories well-organised
Sorting out the inventories in your warehouse may not seem like a control. However, if your warehouse is messy and you are unable to find the inventory you want, you would not be able to control all of them. Thus, the most basic internal control for inventories is to number each place you store them, determine what they are, and monitor them according to their locations.
– Review obsolete inventories regularly
If your staff do not review the inventories, as time passes, the warehouse may be full of obsolete inventories that the company can no longer use. However, the company still needs to spend high storage costs to keep them, and those obsolete inventories may affect the parts which are essential for the manufacturing process. Hence, you should form a team that is responsible for reviewing the inventories regularly to identify whether the company should sell or eliminate any inventory items.
– Keep track of returns or additional requisitions
If production personnel returns extra inventories to the warehouse or request for additional inventories, this may indicate that a mistake has occurred in the picking records.
– Fixing a standard when keeping records for inventory picking
When a staff picked an item from the shelf in a warehouse, you should make sure that they follow a standard procedure to record the picks when they leave the warehouse, no matter the picks are for use in the manufacturing process or to be sold to your clients.
– Signing for the inventories removed
In some occasions, the staff may remove some inventories out of the warehouse other than the normal course of the picking process. If this happens, you should make sure that the staff who is responsible for the removal sign for the inventories that he has removed. This is to make sure that the company keeps a record of who has removed the inventories.