Inventory management is key to ensuring that your business runs smoothly and efficiently. An inventory list can help you achieve this.
An inventory list is a complete and itemized list of your company’s stock. It allows you to see what you have available for purchase or use, track how efficiently you’re turning inventory, and helps you reduce storage costs by showing you what items are not selling or being used. And finally, the inventory list is essential for reporting your income taxes correctly.
Should you opt for a professional inventory list template, we’ll be sharing one later in this entry.
Features of an inventory list
Your inventory list should list every item and product that you have in stock, including raw materials, works in progress, and finished goods. The list should contain the following features:
- Company name
- Your contact details including company address,
phone, fax (if applicable), website, and email address
- Date of inventory count
- The name “Inventory List”
- Item ID
- Item name
- Details and description
- Year of purchase
- Item price
- Remaining stock
Functions of an inventory list
An inventory list makes it much easier to:
- Keep track of what you have for sale. Knowing what items in your stock are available for purchase is key to capitalizing on your inventory. With an itemized inventory list, you’ll know exactly what you have for sale and what is ready to be listed on your website. That makes the process of fulfilling client orders virtually seamless.
- Learn your inventory turnover. In order to minimize excess inventory costs, you should learn your inventory turnover: the number of times your inventory is sold and replaced over a certain period of time. The inventory list outlines all your products and allows you to keep track of your inventory turnover, so you always know if you’re stocking excess inventory.
- Find out which items aren’t selling and spend less on inventory storage costs. An inventory list can help you learn which items aren’t selling so you can adjust accordingly next time you order. This helps you avoid losing money on inventory that doesn’t sell. It also helps minimize storage costs, as excess inventory would be left to sit in your warehouse where it would take up space and accrue storage costs.
- Report your income taxes properly. An inventory list allows you to record the end-of-year inventory of your business correctly. This makes it possible to file your accounts properly, which ensures the accuracy of your end-of-year tax returns.
How to make an inventory list (includes inventory list template)
When you make your inventory list, you can use the features listed above to organize your list. Follow these steps to make sure that your inventory list contains everything you need to keep track of your stock:
- Set up an inventory header containing your business information as well as the name “Inventory List.” Including this information on your list ensures that anyone involved with managing your inventory always has your contact information on hand. This saves time if you need to provide your address or other contact details to manufacturers etc.
- Include the date of inventory count in your header. This allows you to keep track of your inventory turnover ratio.
- Create columns for each feature listed under “Inventory details.” You should list your inventory items at the Shop Keeping Unit (SKU) level. For example, if you have a pair of white sneakers in five sizes, you would list out each size for a total of five entries, not one. Further, your item details and descriptions should validate what makes each item unique. This will help provide information for inventory reporting and tracking purposes.
- Remember to list the year of purchase for each item. This will help you identify which items sell well and which do not, which helps you track your inventory turnover ratio.
- Remember to assign a price to each item. The item price will help you quickly determine the total value of your inventory and value of each item based on price and quantity. This will also help you make a price list for your clients to view.
- Make sure to include a column for remaining stock. You should continually update this column with new purchase orders and sales orders to make sure the number is current.
- Select a time frame for how frequently you update your inventory report. The time frame will depend on your needs. The higher your sales volume, the more rapidly your numbers will change, and the more often you’ll need to update your inventory report.