![]() ![]() The Benefits of Periodic Inventory Systems Thus, you will need to track sales and marketing efforts in lieu of having to worry about inventory. If you are mostly a drop-shipper running your business on an e-commerce platform such as Shopify, your retail partners handle all the physical inventory for you. For this reason, periodic inventory systems are recommended to companies that manage stockrooms or warehouses. When a periodic inventory system is used, business owners can get a more realistic picture of how their selling efforts are paying off or not. The periodic style of inventory management has been around for a long time, and it relies on the traditional methods of physically counting items while taking into consideration the cost of goods sold (COGS) as well as other accounting principles. In this case, you can get by with perpetual systems included in many point-of-sale software solutions, which track items on a real-time basis. If you run an e-commerce business that does not require you to physically keep items in stock, going the periodic inventory route is not necessary. When adequate periodic inventory systems are in place, businesses with high inventory counts can figure out the best pricing and selling practices to boost their bottom line. This balance is applied at the start of the subsequent period. The results of a periodic inventory count are used to balance a company’s ledger at the end of an accounting or bookkeeping period. Unlike regular inventory counts that mostly focus on the number of items in stock and their projected levels, periodic inventory systems serve a financial purpose that takes valuation into account.
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