Inventory Accounting is a crucial part of doing business regardless of its nature. This is because inventory can show not only the actual profit that a business has earned but also other variables such as stocks, assets, balance and taxation.
These variables work correlatively. So, having a system to monitor and manage them smoothly is necessary. In doing so, a company may need to source out services and professionals to track and work on their inventory most especially on their products. Through inventory, one can determine the success of their business. It can also be a basis of important business decisions that will largely affect the operations of the company. It will also help in analyzing sales and preparing for seasonal trends which would bring in more profit. Inventory is made up of valuable information which needs to be handled correctly to be used at the advantage of the business owner’s interests.
Through the years, accounting services have evolved and transformed to cater different specific needs. That also shaped the functions that they decided to offer on firms that are in need of their service. With the emergence of modern technology, cloud-based accounting management systems also became part of the trend. They too, have differences in features based on a company’s needs.
Then there are the more advanced systems that can be integrated with the operations such as in sales and ecommerce systems to keep real-time inventory data that is always up-to-date, while less sophisticated (and more manual) options are available for businesses with less dynamic sales.
Here we will discuss some more about basic types of inventory must be accurately accounted to be able to know assess cashflow and business finances:
First one is the Manufacturing inventory. They say it can be a little more complex, because of the several phases of the manufacturing process.
Meanwhile, Raw Materials inventory refers to the goods or ingredients needed to produce the finished product.
Next is the Merchandise inventory which is about all the goods that a company owns. Simply put, these are what the retailer sells for a profit, that is why tracking the costs of these goods is important because they help determine the actual profitability of the business.
Works in Progress inventory refers to the items that are not yet available for sale as they are still being made. But they are still an asset for accounting purposes, and should still be monitored. Even though they are not yet complete and ready for sale as merchandise, still they already have progressed as they are now past raw material stage. Now, after being processed, that’s the time Finished Goods inventory is produced.
Now, these are some of the main inventory systems that you may be needing to look for when trying to outsource especially online. It is highly recommended that you start with programs with these features first and just upgrade later on if you are already aware of what you really need. Unless, you are able to carefully analyze your needs prior to picking your first inventory management system. Remember that you should be aware and prepared when going through this process.