What is an inventory adjustment and when should I complete one

Latest update: - Nat Dudley

Sometimes, you need to reduce the amount of inventory you have without making a sale. This may be for:

  • Breakage - inventory that you have damaged and cannot sell
  • Wastage - inventory that is out of date, or needs to be thrown away
  • Write-offs - inventory loss due to other reasons such as theft
  • Consumption of own inventory - inventory that you use or consume in the course of your business that you are not directly selling to a customer, but that you need to account for in your inventory.

An inventory adjustment is used to do this.

Note: to increase your inventory levels (add more inventory into your business) you should always complete a stock order so that you can record the supply cost associated with the items you are adding.

How do I complete an inventory adjustment?

Important: A inventory adjustment should always be completed using the inventory feature in Vend.

1. Open the product page, and click the stock control tab.

2. Click the 'New Inventory Count' button. This will create a stocktake.

3. Fill out your Inventory Count details:

  • Select the outlet you're adjusting the inventory for.

  • Set a start date and time for this count.

Note: The start date and time will default to today's date and time.

  • Rename the count. This is so you can easily differentiate your adjustments from your regular inventory. You should pick a consistent naming structure for your adjustments so you can filter these later - for example 'Breakage 14-03-2016 12:00 PM' 

4. Click 'Partial Count'. The partial count builder will appear.

Important: Make sure you choose partial count. If you choose a full count and only count a few items, the rest of your stock not included in this full count will be zeroed out.

5. Type in suppliers, brands, types, tags, SKUs or the name of the products to determine how your partial count is populated. By doing this you will create a partial inventory adjustment just for these items. It is important to note that you may only set a maximum of 20 individual SKUs at this stage in the process.

Once you've added everything you want to count, click 'Start' to load the count process.

7. In the 'All Products' section, you'll see the expected count level. In the search bar, type or scan the product SKU or name. Change the quantity to the updated number to reflect the breakage, shrinkage, or wastage, and click 'Count'.

8. Your adjusted items will show in the Counted tab, and the 'All' tab will show the new count.

9. Once you've added all the products and updated counts, click 'Review Count'.

10. Check the differences in unit numbers are correct. If they are, click 'Complete'.

Your inventory levels will be updated, and you'll see a finalised count report showing the change in cost.

How do I report on inventory adjustments?

IMPORTANT: Inventory adjustments are not automatically passed to account systems such as Xero, and do NOT appear on reports as a separate line item, so you should ensure that you make a record of these figures in your accounting system. You can find completed inventory adjustments on the Inventory Count page under the completed tab, but you will need to manually report on these.

How does an inventory adjustment affect my inventory costs?

Inventory counts will use the average weighted value of the items you have available at the time of counting in order to calculate the cost difference.

Why shouldn't I use the Sell Screen for this?

If you process inventory adjustments through your Sell Screen, your margins will be incorrect, and your sales figures will be incorrect when you complete your reports for your accounts. You should never complete inventory adjustment transactions via the Sell Screen.