Physical Inventory - Recording & Reconciling the Count

The following questions are intended to help you decide which is the most suitable method to use to record the count and analyze the variances:

  • Will you use Count Sheets or Tags?

  • If Tags, will you use purchased Tags, Blank Tags printed by Print Inventory Tags (PI09) or Coded, Numbered Tags printed by PI09?

  • If Count Sheets, will they be printed by Inventory Count Sheet Printing (PIO8) or produced externally?

  • In what sequence will the Tags or Count Sheets print in? (Product, Supplier Product, Bin/Product or Bin/Supplier Product)

  • Will Blank Tags be required?

  • Will the batch balancing feature in Physical Inventory Page Total (PI11) be utilized? (This requires totaling the count quantity on each Count Sheet or on ranges of Count Tags.)

  • Will Inventory balances be 'frozen' by Freeze Inventory (PI10)?

  • If not freezing the Inventory, when will Invoicing, Receiving and Adjustments resume?

  • What criteria will be used for recounts on variances - Dollar Variance or Unit % Variance?

  • If performing counts in secondary Warehouses, will they enter their own counts or send them to Head Office for processing? Will they be responsible for the first pass of the Variance Report and recounting?

  • Who will authorize rolling the physical count quantities to book (Transfer Physical to Book (PI19))?

  • What is the target time for rolling the physical to book?

How will recounts be controlled? The Freeze Inventory (PI10) program allows you to start receiving/selling stock after the counting is completed but before it is rolled to book by PI19. However, recounts become complicated if physical movement of Product occurs prior to all recounts being completed. Some method of tracking (or accounting for) movement that occurs between the original count and any recounts must be instituted.

For example:

  • original count on a Product = 100
  • the book (frozen) quantity = 150
  • movement out (sold) after count = 20
  • found some extra stock, recount quantity = 125
  • count amount to enter after recount = 145

The count quantity to enter after the recount is the recount quantity PLUS add back the stock already sold: 125 + 20 = 145. This is compared to the frozen quantity of 150. An adjustment of (-5) units will be made when the physical is rolled to book.