Why stock figures matter
Every pound of stock that is overstated adds a pound to profit, and every pound understated takes one away. If your closing stock figure is a guess, your gross margin, your tax bill and any decisions based on the accounts are all built on that guess. Getting stock right is not just a year-end exercise; it affects monthly reporting, pricing and cash planning too. Money tied up in excess stock is money that cannot be used elsewhere in the business.
Common stock problems we see
- Gross margin swinging wildly from month to month with no obvious reason.
- Inventory software showing one value and the accounts showing another.
- Stock bought in bulk being expensed immediately, so profit looks low one month and high the next.
- Old, damaged or slow-moving lines still held at full cost.
- Year-end stock counts done in a hurry, with no reconciliation afterwards.
- Goods in transit or held by third parties left out of the count altogether.
How we help
- Valuation. Stock is generally valued at the lower of cost and net realisable value. We agree a sensible costing method for your business and check that write-downs for obsolete or damaged items are reasonable and documented.
- Cost of sales. Making sure purchases, freight, import costs and duties are treated consistently, so gross margin reflects reality.
- Stock counts. Practical guidance on planning a count, cut-off procedures for goods in and out, and how to record the results.
- Reconciliation and adjustments. Comparing counted stock, your inventory system and the ledger, then posting the adjustment journals with a clear audit trail.
- Software setup. Reviewing whether inventory tracking should sit in your accounting software, a separate inventory app or your sales platform.
Our process
- Understand what you sell, where stock is held and how it is currently recorded.
- Review recent stock figures, margins and any differences between systems.
- Agree a valuation method and count procedure.
- Support the count, reconcile the results and post adjustments.
- Set up a routine for monthly or quarterly stock reporting.
What we'll need from you
Recent stock reports or count sheets, purchase invoices for main product lines, details of any inventory or ecommerce software, information about obsolete or damaged items, and access to your accounting software through its accountant invitation.
Online sellers and makers
If you sell through marketplaces, stock held in fulfilment centres needs to be included and reconciled too. Our ecommerce accounting page covers the wider picture for online sellers. Manufacturers may want stock figures linked to job costing so raw materials and work in progress are tracked through to finished goods.
Stock accounting across Kent
We help shops, wholesalers, food and drink producers and online sellers across Kent, from high streets in Canterbury and Tunbridge Wells to warehouses near Ashford. Accurate stock flows straight into your management accounts and year-end accounts. Get in touch before your next count and we can help you plan it.
Frequently asked questions
How should stock be valued in the accounts?
The general rule is the lower of cost and net realisable value, meaning what it cost you or what you could realistically sell it for after selling costs, whichever is lower. Cost can include purchase price plus delivery and import costs. Items that are damaged, out of date or slow moving may need writing down.
Do I need to do a physical stock count?
Even with good inventory software, a physical count is the best way to confirm what is actually there. Most businesses count at least at the year end, and many do rolling counts during the year. Differences between the count and the system should be investigated before adjustments are posted.
Why does my gross margin jump around each month?
Usually because stock purchases are being treated as costs when bought rather than when sold, or because stock levels are not updated monthly. A month with a big purchase looks unprofitable and the next looks very profitable. Recording monthly stock movements, even estimated, gives a far more reliable margin.
Can you help if my inventory system and accounts disagree?
Yes. We compare the two, identify the causes such as unrecorded returns, timing differences, incorrect costs or duplicate entries, and post the corrections. We then agree a routine so the systems stay in line, which makes the year-end much easier.
Inventory and Stock Accounting across Kent
We help clients throughout the county, including: