Performing Physical Inventory Counts

Whether it is on a quarterly, semi-annual or annual basis, if you manage inventory, you will at some point need to do physical counts and adjust your quantities accordingly. Inventory management in ESC is only as good as it is managed, but over time, no matter how diligent a company may be, inventory variances always occur. Things like data entry errors, misplacement of inventory and of course pilferage are all reasons for inventory discrepancies.

To keep your inventory in great shape and stay abreast of any possible trends in theft or errors, it is imperative that physical inventory counts be done as often as needed.

Overview of the Process

1. Print the Physical Worksheet from Inventory → Reports.

• Note: If you are going to be adjusting your inventory by scanning barcodes or QR codes into the Adjust Inventory screen, you will not have to print the Physical Worksheet.

2. Count all inventory items in each warehouse (including all vehicle warehouses).

3. Use the Adjust Inventory screen to adjust item quantities.

4. Remove any items from your Item List that will no longer be in use.

Print the Physical Worksheet

• Note: If you are going to be adjusting your inventory by scanning barcodes or QR codes into the Adjust Inventory screen, you will not have to print the Physical Worksheet.

1. Go to Inventory → Reports and click on Physical Worksheet.

2. In the Warehouse filter on the report's Filter screen, type in or select the Warehouse number you want to perform a physical count for.

3. By default, this report will list all items in order by their Part Number.  You can change this to Aisle/Bin or Category using the Sort Order menu under the Report Title field.

4. Then click Print

• Note: You may also Preview the report first, then Print it from the Preview screen.

Count Your Inventory

Note: If you are going to be adjusting your inventory by scanning barcodes or QR codes into the Adjust Inventory screen, you will not have to perform any preliminary counts.

On the Physical Worksheet, each item will be listed by its Part number and Description.  It will show an Aisle and Bin if one has been assigned to help you locate the part and the current quantity that ESC thinks is in stock in this warehouse under Current Part. Under Actual Part, you'll fill in the amount that this warehouse actually has in stock for this part.

For instance, if the Physical Worksheet has a Current Part quantity of 5.00 for Part number 000004P, but you can only find 3, then you'll write "3" into the Actual Part line next to part 000004P.

Adjusting Inventory

Once you have finished counting the items in a particular warehouse, be sure to note the date that the inventory was counted.  This is the date you'll want to use to perform an inventory adjustment.

1. In ESC, go to Inventory → Adjust Inventory.

2. Enter the Date that the counts were performed.

3. For the Credit Account, select what account the adjustment is going to affect in you accounting system.  If you are using ESC without an accounting integration, you may simply select the Inventory account, since no financial transactions will be recorded.  If you are integrated with QuickBooks, Sage 50 or are using ESC Accounting, you'll want to select the Credit side of the Journal Entry that will be created to record the adjustment; the Debit side will be your Inventory account.  If you want to create a 'wash', meaning that this adjustment makes no changes to your account balances at all, then you will select your Inventory account.  The Journal Entry will still be created in your accounting system, but since both sides will be affecting the same account, they will cancel each other out.

4. Click the Activities button on the toolbar and select Fill List of Warehouse Parts.

5. Select the Warehouse that you wish to adjust.

6. Put a check in the Zero Quantities box and then click OK.

7. All items that had any quantity at all for the chosen warehouse will appear in the Adjust Inventory list with their Quantity set to zero.  At this time, you can manually enter the correct Quantity for each item based on the numbers in the Physical Worksheet that you used to perform your counts.

• Own a barcode scanner?  You can also choose the Scan Inventory Items option from the Activities menu and use a barcode scanner to scan the items you have in stock. If you scan the same item more than once, the quantity for that item will automatically be incremented, so you won't have to manually type in quantities and can complete an entire adjustment with just the scanner.

8. You may notice you are missing serial items from this screen.  These will be excluded from the list.  If you need to adjust the quantity of a serial item for this warehouse, you will need to manually add it to the list.

• Note: The Adjust Inventory screen will not allow you to increase the quantity of a serial item. Entering a serial item in the Adjust Inventory screen will automatically set the quantity of that item to zero and require you to select a Serial # to adjust out.  If you need to add a serial item to this warehouse, you'll need to do so in the Receive Items screen.

9. You may wish to fill in the Reason field with an explanation of what the purpose of this adjustment is. It could be something like "Received wrong item" or "Fall Inventory".  This will print out the Adjustment Report and the Transaction Detail Report so that other users will be able to recognize the why an amount was adjusted.

10. Once all quantities have been corrected, click Save.  ESC will prompt you to print an Adjustment Report, but you can close that screen if you do not wish to print the report.