STOCK RECORDING.

Meaning Of Stock Records

Stock records also called stock card is a record of movement of stock into or out of the store or
warehouse. It also means the keeping of records to know ways in which stock are brought into
and out of the company.

Record Keeping is a framework by which the records of an organization are created and
managed in a way that supports a business. Records are the source documents, both physical and
electronic, that specify transaction dates and amounts, legal agreements, client, customer and
business details.

Stock recording system refers to a computerized system that consist of barcode systems, data
integration systems, accounting and invoicing systems that automatically update as orders are
processed

Without an effective management system, inventory observation, control and management would
be inaccurate. Hence a good system should be able to identify obsolete, surplus and
unserviceable stock. The system is as good as the data fed into it.

Stock is a very crucial aspect of every organization. Managing the stock is even more crucial as
it determines the organizations effective running. An effective warehouse managing system
should also be put in place to ensure the accuracy of the stock records within the organization.
Therefore, an organization should adopt consistent stock recording habits that will monitor the
flow of stock.

IMPORTANCE OF STOCK RECORDING.

1. Stock records help to prevent over stocking of unnecessary materials. Allows for
precise decision-making. When you have 100% accuracy of stock records, there are
all sorts of insights you can use in your business – like refining procedures,
 forecasting stock demand and planning promotions – to ensure you make the right
decisions for future growth.

2. Provides specifics for sales. When you know what sells best and where, you can
spend more time focusing on those products and locations. From profitable price
points to identifying trends, inventory software provides a raft of useful data for your
sales division.
3. Establish KPIs and check that your business is meeting those targets. If you’re
putting in place a strategy for your business, it’s ideal that you understand how to get
there. Wanting to increase inventory turnover? Then you need to know exactly what
it is right now. Keen to reduce low-turning stock? You have to be able to identify
those products.
4. Minimize the risk of stockouts, overstocking and dead stock. Any one of these
occurring in your business can spell disaster: not enough stock, and you miss out on
sales; too much and it’s costing money to hold onto; and dead stock is simply a
waste.
5. Reduce resources required for manual stock management. Tracking stock and
doing periodic stock takes take time and can cause disruptions to your business –
time and money that could be best spent elsewhere.
6. Optimize warehouse organization. Having a greater understanding of your stock
levels, and which are most in demand, will allow you to organise your storage
facilities in a far more efficient way. This provides ease of use for employees and
minimises time spent procuring products.
7. Track stock across multiple locations. You can easily keep track of stock across
multiple warehouses, in multiple locations, anywhere in the world, with real-time
accuracy allowing you to understand whether you need to move stock.
8. Pick, pack and dispatch. Pick and pack features give you more control of your
warehouse operations. You can track stock from ‘pick’ right through to ‘dispatch’,
including track-and-trace for orders on delivery, and can even keep your staff
updated via the inventory software.
9. Store received make account ability and check easy.
10. Adequate store records prevents the misuse of materials by worker.
 11. Store records enables the various department take material duties conveniently.
12. It enables the organization determine the rate of turnover of stock thereby making
the company budget easy.
13. Prevent fraud or theft Having a fraud prevention process by keeping detailed
records of your business expenses and transactions is essential for your company -
be it as a startup, small and medium enterprise (SME) or large enterprise. Having an
overview of your business cash flow can allow you to understand how much cash is
coming in and out of your business and produce an accurate financial statement for
accounting and auditing purposes.
14. Pay your taxes With documentation and good record keeping practices, you can pay
your taxes accurately, on time, and save on penalties!
15. Comply with laws
Good record-keeping practices are essential because it helps companies comply with various
laws in various countries. Companies should establish good accounting  and expense
management  systems to drive good record keeping practices and retrieve or file records easily.
Increasingly, accounting and expense management  systems have partnered or integrated with
each other to ensure seamless data synchronization and provide accounting-friendly solutions
that are affordable and user-friendly for startups and SMEs.
Manage your cash flow
Cash is king when it comes to the financial management of a growing company. As evidently
portrayed through COVID-19, maintaining a healthy cash flow  that can sustain against
pandemics and other unforeseen circumstances is very important if you want your company to
survive in the long run.
This is where record keeping comes in. It helps you to identify and understand where your
dollars are coming in and going out from and have an accurate projection of the health of your
company’s finances. 

Make business decisions

Every dollar within a startup and SME is very precious and should be well-spent. Understanding
where your dollars are coming from and headed to is crucial in helping you better understand and
make data-driven business decisions.

Expense management software  is a digital cloud solution that can help you breakdown your
business expenses and retrieve insights  on your business spending. As a startup or SME owner,
you would want to save as much time and money as possible and focus on other important
business tasks to drive profitability and growth.
6. Save time and costs 
When you need to file reports and conduct financial year end closing, a good record keeping
system can allow you to save time and money as you do not have to panic and go through a last-
minute rush to meet deadlines or hire someone last minute to handle it.

Digitising your documents can reduce the hassle and ensure you stay compliant with regulations
and deadlines. By putting your documents and records online , you can increase operational
efficiency, reduce transportation and storage costs, search records faster and easily access
records from multiple digital devices. 
Otherwise, you can also consider hiring a corporate secretary . It is possible for startups and
SMEs to do so as there are affordable corporate secretary services available in the market that
can be less expensive than hiring an additional headcount! 
7. Prevent loopholes and oversight
Record keeping can help to justify and explain why the company management made certain
decisions. Cash flow problems are also found to be one of the leading causes of failure  for
businesses and having consolidating records will enable businesses to make better decisions.
With your business survival at stake, the possibility of having loopholes and oversight cannot be
ignored by business owners and precautions should be taken.

FACTORS TO CONSIDER WHEN SELECTING A STOCK RECORDING SYSTEM

1.Cost
The cost of then software usually depends on the requirements. It would be best to find out the
market cost of the software so that you can determine whether the price offered by the vendor is
worth it or too expensive
2.Flexibility
It is important to see if the software you considering is compatible with mobile devices, how
many users can use it, whether it is a web-based or on premises. It is crucial when multiple stores
or warehouses are involved and apart from each other.
3.Ease of use
One should choose a system that is not too technical or complex. The usability determines how
effective the implementation of inventory management software in the business.
SUPPLY CHAIN MANAGEMENT: MODULE ONE – KNEC STUDY MATERIALS,
REVISION KITS AND PAST PAPERS (knecnotes.co.ke)

STOCK RECORDING METHODS

Perpetual Inventory System

As the name hints in the perpetual inventory system require continuous recording of the stock. This
means the inventory is recorded after every issue or purchase/receipt of raw materials, final goods,
work in progress etc. So these records will need updating on a daily basis.

To ensure the accuracy of the perpetual inventory system, physical counts of the inventory are done
a few times in a year. This helps us cross-check the inventory and check the accuracy and validity of
the perpetual inventory system. In the perpetual inventory system, the value of the closing stock will
be determined by the cost of goods issued and cost of goods sold. The following equation will help
you understand the valuation of the closing inventory:

Opening Stock (Value known) + Purchases during the year (known) – COGS (known) = Closing
Stock (Balancing Figure)

Advantages of a Perpetual Inventory System

  Helps avoid the time-consuming practice of regular stock taking. In this system, we
physically count stock only a few times a year.

 Management has daily information about the quantity and valuation of closing stock.
This helps in the production and distribution management.

 There is a system of internal check that dissuades theft or misappropriation. We

check records of different departments like purchasing, stores, manufacturing against
each other.

 Also, there is no need to halt the production process to take physical stock count ever
so often.

 Helps avoid over-investment in stock and reduce the carrying cost of the inventory.

Periodic Inventory System

In the periodic inventory system, the inventory verification is done by an actual physical count of
the inventory on any given date. So to determine the closing stock a physical count of the inventory
(numbers, weight etc.) will be taken. Firms usually do this near the end of the accounting year.

The valuation of the inventory/closing stock is done using one of the various
inventory pricing methods, i.e. LIFO, FIFO, Average Cost etc. In this method we will calculate the
cost of goods sold using a similar equation as above:
Opening Stock (known) + Purchases during the year (known) – Closing Stock (counted) = COGS
(balancing figure)

Disadvantages of the Periodic Inventory System

This system suffers from many limitations. Let us take a look,

 Firms usually do a physical more than once a year. They usually make quarterly or
even monthly statements which will require frequent counting of the inventory.

 To do a physical count we have to suspend normal manufacturing and other activities.

This leads to losses for the firm.

 Since COGS is a balancing figure we cannot account for loss due to damage or any

such abnormal losses.

 This system does not provide any inventory control methods or systems.

TYPES OF STOCK RECORDS.

1. Procurement Form: Before ordering for goods, The department or office concerned must
obtain and fill what is known as the procurement form.

After filling the form, it is sent to the office in charge usually the purchasing manager for signing
and approval. If approved, the order then sent to the company that will supply the items, or on
the othr hand it may be bought in the open market.

2. Delivery Note: This is a document that shows evidence of delivery of goods to the buyer.

3. Goods Received Book: This is also a document where the goods are first record before entry
into the stock card.
4. Stock Card: This used for recording of movement in and out of stock. A card is provided for
each item of stock. The card has three major columnm, that is: Stock In, Stock Out and Stock
Balance.

WAYS OF MAINTAINING STORES RECORDS.

1- Establish policies and procedures

One of the best ways to improve records management is to create clear policies and procedures
improve records management dramatically.

This is a critical stage that will assist you in precisely defining the rules and processes for
maintaining records throughout their lives, from creation to disposition.

Having well-established policies will improve your records keeping and ensure that records are
always treated and managed consistently.

So, in order to be as clear as possible, spend your time developing a decent strategy. Check that
your policies are:

1. Simple to understand: describe and clarify each step in the procedure so that your
staff can follow it.
2. Not so complicated: if the laws and regulations are difficult to follow, some of
your staff will find a method to work around them, exposing your sensitive
information or deleting documents before they should!
3. Describe the various tasks and duties of employees.
4. Clearly identify all stages of a record’s lifecycle.
5. In conjunction with the retention term, state precisely the sort of records your
organization works with.
6. How to Prevent Unauthorized Access to These Records
Always keep in mind that these rules should be available to all employees and properly
publicized throughout the firm.
2- Ensure records are easily accessible

When of the most critical records management challenges is to ensure that records are easily
accessible for employees.

Ensure that all of your organization’s records are easily accessible. Begin by making excellent
use of metadata through systematic management, and then utilize the system to ensure that
information is available fast when needed.

When discussing different record keeping techniques, we all agree that making your records
always available and accessible is one of the most important steps to apply.

3- When appropriate, archive records

Records should be available as long as the business needs them. it is very important to know how
each type of record should be archived.

An effective records management implementation plan should have archiving records a

requirement for organizations.

4- Create and implement a records retention policy

This is crucial for preserving record control and being compliant. For record management, each
industry needs to adhere to a set of laws and regulations. Begin by identifying these industry and
country-specific rules, and then create a records retention timeline.

5- Recording, tracking, and monitoring

You must guarantee that you have complete history and control over the lifespan of a record.
This is readily accomplished through the use of technology that allows you to know where
documents are maintained, who has access to them, and so on.
6- Use software

We live in a world where technology plays a significant part in how businesses prosper. Using
RIM software allows you to govern and manage records digitally, automate retention regulations,
regulate access, and so on.

Consider this a must-do step to improve your records keeping.

7- Train your employees

To fully benefit from the system’s capabilities, you must teach your organization’s staff on how
to utilize it.

You must guarantee that each knowledge worker can function successfully without assistance.

8- Outsourced if needed

This step is the last ways to improve records management within your organization.

If you are new, especially in big businesses, it is a smart idea to outsource all or part of your
records management program to a well-established consultant firm (there are many!) to help you
get started and teach your personnel.

9- Implement best practices

Records management best practices are essential for organizations to maintain their legal and
regulatory compliance. They also help organizations to manage their records lifecycle more
efficiently by organizing them, labeling them, storing them, and disposing of them.