The Reserve Bank of Australia's (RBA) ban on surcharges for debit and credit card payments, proposed to take effect on 1 July 2026, will, if accepted, significantly reshape the payment methods used in your store. This reform targets surcharging fees that retailers add to transactions paid for using Visa and Mastercard.

I am building on my article from yesterday, which sparked lively discussions. Let's explore the key issues you should consider.

Firstly, this proposal does not address the cause of why people charge these surcharges; the symptom of the surcharge is not the cause. Nor does it address the fact that SMB businesses pay significantly higher fees than larger organisations, often 350% more. The only point mentioned here that is relevant is the greater transparency in the costs. However, it's become quite transparent now. When I reviewed my EFTPOS and credit charges last time, I got, among other documents, a charge table showing the rates the bank would charge depending on my turnover and average transaction value.

If the proposal is accepted, likely fallouts include reduced cash transactions, increased credit card usage, continuing fee disparities between SMBs and large organisations, and some inflationary pressures.

Exploring the Key Fallouts if the Proposal Proceeds

Why Cash Might Fade Faster

13% of payments were made using cash in 2022, which is down from 70% in 2007, and that number is projected to fall to just 4% by 2030, according to Australian Banking Association.

Cash has long been popular for small, everyday purchases, such as a quick coffee or a newspaper at your local shop. Its appeal lies in the simplicity and lack of fees for both you and the customer. However, with surcharges banned, the cost barrier between cash and cards vanishes for consumers. Why would they dig for coins when tapping a card costs the same? This shift would further diminish the role of money, accelerating a trend already evident in Australia, which is what the Australian government aims to achieve.

Beyond diminishing cash use, we can expect to see a greater use of credit cards, as this ban would also equalise charges, leading to another key shift: many will ask, Why use debit when they can get credit for free?

Debating the Consumer Savings and Business Losses

The RBA estimates that Australian consumers could save nearly $1.2 billion annually if the proposal is implemented, equating to approximately $60 per card-using adult. This figure is debatable. Much of this money will shift elsewhere in the system, rather than disappear. That $1.2 billion represents a substantial loss to Australian businesses, particularly the large issuers of debit and credit cards, who stand to take significant revenue hits if the reforms proceed in their current form without changes.

Fee Hikes

Major banks will seek to recover losses from lowered interchange fees.

Running payment networks for Visa, Mastercard, and EFTPOS is enormously expensive. The cost of infrastructure, security, and global operations costs won't disappear under this plan.

Banks will need to pass these costs on somewhere. They might increase cardholder fees, such as annual charges or interest rates. But hiking merchant fees through administration charges is more likely.

Uncertainties Around Overseas Cards and Surcharging

It's unclear whether the plan will allow surcharges on overseas cards, such as American Express or a Visa issued in Singapore. I suspect that some form of surcharging will still be permitted for international transactions. It creates a pain point, as we will need to distinguish between domestic and foreign cards at checkout, which is long overdue. If this is done, we can adapt our POS systems to automatically detect card types, allowing us to handle surcharges without slowing down service.

Potential Inflationary Effects and Price Adjustments

Many businesses that currently apply surcharges are already considering price increases to compensate for the lost revenue. If you are among them, this approach makes sense to protect your margins, but it will contribute to slight inflationary pressures across the economy. If you are affected here, this will require careful handling to avoid alienating price-sensitive customers.

Turning Challenges into Opportunities with Practical Strategies

It's not all downside, as I stated yesterday, these changes will eliminate surcharge-related disputes, thereby fostering a better shopping experience. The reality is that customers hate surcharges.

With the timeline in 2026, you have time to prepare.

One idea worth considering is offering cash discounts after the ban is lifted. It remains an allowable option and can encourage customers to choose cash, thereby reducing your fee exposure. For example, one of my clients offers a free can of drink if the transaction is over $30 and is paid in cash. It worked well.

You need to consider how to adapt your payment strategy.

If you own or manage a retail business in Australia, it's time to consider the Reserve Bank of Australia's (RBA) proposed changes to card payments, which aim to eliminate surcharges on debit and credit cards. While the RBA surcharge ban offers some benefits, it also brings challenges for SMB retailers.

The Labor Party entered the last election committed to eliminating debit card surcharges, which were part of their election promises. Now the RBA has expanded this significantly, proposing a broader ban that includes both debit and credit cards. If it goes through, it will directly impact many SMB retailers as it means you will no longer be able to impose a surcharge to offset the costs of accepting credit, debit, or prepaid cards from major networks such as Mastercard, Visa, or EFTPOS. This forces you to absorb these expenses.

After yesterday's consultation, although we were hoping for something better, we concluded that it's not all negative, as the RBA is also requesting that interchange fees be lowered. For instance, debit card interchange fees are to be decreased from 10 cents to 6 cents per transaction, while credit card fees go to 0.3%. The plan also caps fees for foreign cards, but it's unclear how this works. For example, if a French bank charges 50 cents, what does the RBA propose? Reading the document, it's unclear how these lower fees are to be passed on to the SMB retailer. My immediate concern is whether the banks will be able to charge additional or higher administration fees to offset these reductions.

The RBA plan will require payment processors to disclose their fees in a clear and comparable manner, segmented by merchant size and card type. Although some saw this as a positive, I view it as insignificant, as reputable payment processors have been doing this for some time.

These changes are scheduled to commence on 1 July 2026. At least this gives us all a reasonable timeframe for adaptation.

Before I review some of the positives and negatives, let me note that today, the debit card is the dominant form of payment in retail, and it should, as such, be the default payment method for pricing.

Positives for SMB Businesses

The reforms could reduce card acceptance costs through new, lower caps on interchange fees. Since most SMBs already absorb these costs into pricing, they stand to save money. The RBA estimates that 90% of businesses that do not surcharge will benefit (our data shows 70% do not surcharge), meaning the majority could still gain.

Eliminating the surcharge will prevent many customer disputes, complaints, and confusion, and reduce friction with customers.

The push for greater fee transparency is another benefit, as it eliminates the need for you to request it directly. Potentially leading to cost savings.

It does not stop you from offering discounts for cash transactions. This approach rewards customers who opt for the lower-cost option of cash without violating the new surcharge ban.

Implementation costs, while present, are relatively modest. In our POS System and most others, it's just a minor change to the settings. The price of many goods in the shop will need to be changed to include the costs of the surcharges.

Challenges and Considerations, the negatives.

While the reforms offer substantial upsides, they also present problems for SMB businesses operating today with tight margins. Payment providers will still be charging fees, which SMBs must now absorb. For retailers in low-margin sectors, such as those with regulated or capped prices, like Lotto, I doubt they will see an increase in merchant margins to compensate for the loss of the surcharge. Lotto has made it quite clear that they do not like these surcharges.

Unfortunately, the plan favours larger retailers, who now have better rates, over smaller ones, and the RBA seems unconcerned with that.

The ban on surcharges encourages customers to use higher-cost cards. Many will switch from debit to credit cards. What happens if an American Express card is used?

Reliance on payment providers to pass through savings from lower interchange fees introduces uncertainty. I have spoken to them several times about this issue, and they claim that they are making little of it. If so, where do they make up the difference? Therefore, although the RBA anticipates that these reductions will benefit merchants, there is no guarantee that they will occur. Will there be higher administrative charges?

Additionally, merchants will lose some negotiating leverage with banks, as the current surcharges have been a concern for the banks.

The Outlook for SMB Retailers

With the current strong political backing, the RBA's plan is likely to proceed as outlined in their July 2025 consultation paper. SMB retailers should prepare now for the July 1, 2026, rollout.

So get ready to adapt? Once we are aware of the exact changes, we will provide a free guide to our users to help them make the necessary adjustments.

This information is based on the RBA's consultation papers from July 2025, which can be found here.

Written by:

Bernard Zimmermann is the founding director of POS Solutions, a leading point-of-sale system company with 45 years of industry experience, now retired and seeking new opportunities. He consults with various organisations, from small businesses to large retailers and government institutions. Bernard is passionate about helping companies optimise their operations through innovative POS technology and enabling seamless customer experiences through effective software solutions.

Negative inventory, also known as negative stock, is when your system shows that item quantities are negative. For SMB retailers, this is a warning sign of serious inventory management issues that need immediate attention. Every instance points to deeper problems in your POS system. If not fixed, this negative stock can quickly lead to significant issues.

Understanding the causes of negative stock is a first step toward resolving these discrepancies.

Understanding negative stock

When your records display negative stock, your stock quantities information is unreliable, making it difficult to make informed business decisions. As a result, staff may lose trust in the POS system and hesitate to rely on its information. If the staff start to realise that your controls are weak, it can be disastrous as it invites staff theft.

Additionally, negative inventory distorts sales, purchasing, and financial reports, making it more difficult to analyse performance.

Beyond data reliability, negative inventory also disrupts key business reports.

Causes of Negative Inventory and How to Prevent Them

Negative stock usually results from a mix of factors. -Delays in processing supplier invoices (leading to sales before stock is entered into the POS System) -Errors in supplier invoices -Staff entering incorrect quantities.

Fortunately, some preventative measures can help minimise these inventory incidents.

Preventing negative inventory starts with robust staff training. Ensuring your team understands correct inventory procedures and that you consider it essential to do accurate data entry. Checking carefully that suppliers' electronic invoices match the deliveries. Implementing barcode scanning for both receiving and selling stock significantly reduces manual entry errors.

Financial and Customer Service Consequences

Negative stock can have significant financial consequences, as it distorts your KPIs and leads to incorrect calculations of the cost of goods sold (COGS) and profit margins.

Possibly the biggest problem is that it will result in inaccurate GST tax reporting.

From a customer service perspective, negative inventory can lead to lost sales and a poor customer experience, as the computer indicates that you do not have stock when, in fact, you do have the stock the customer is looking for to buy.

Detecting and Correcting Negative Inventory

To address negative inventory, use your POS system to run reports like 'Quantity On Hand' or 'Price Check.' It is easier to do it one department at a time rather than the whole shop at once. Items with negative quantities are clearly shown. Please investigate each case to identify whether the cause is a counting error, data entry mistake, or delayed invoice.

These financial inaccuracies also impact customer service in tangible ways.

Finding the negative stock

Fortunately, we have a quick and easy way to check stock quantities for what you have on hand.
 
Go to reports. There is an option for Quantity On Hand and Price check; click on that.

We exclude items with zero stock. 
 
I suggest doing it by department, so in this example, I picked the dissection (department) tobacco. 
 

Now, in the outcomes report, which lists the details of your item, look at the quantities on hand in the QOH column. You may see items in brackets, as indicated by the green arrow below; these are the negative Stock Discrepancies.

At first, you will find it a lot of work to fix it, but once done, it's relatively quick.

You should frequently check this report for negative stock values, say monthly until the problem is fixed.

Now, audit these negative items to determine what went wrong in your inventory management system.

Inventory Adjustment Best Practices

After completing a stocktake, your inventory figures are at their most accurate. So it is the ideal time to review and correct any discrepancies.

When making inventory adjustments, it is a good idea to determine the reason for each correction. It can reduce the problem in the future.

Real-World Example: The Cost of Negative Inventory

A staff member mistakenly told a customer that the item was out of stock when it was actually in stock. It led to a lost sale for the business. When the staff member saw they had the jumpers, they reported this to the owner. What she found was a negative quantity for a popular jumper. However, upon investigation, they discovered that they had not entered a recent delivery invoice.

Empowering Your Retail Business

With proactive prevention and early detection, negative inventory can be handled by utilising tools like our reports to stay informed about your stock quantities.

Only by understanding the causes can you fix the problem.

Let us know if you have any other questions!

*This article draws on industry best practices and current expert recommendations to help SMB retailers understand and tackle negative inventory.

Written by:

Bernard Zimmermann is the founding director of POS Solutions, a leading point-of-sale system company with 45 years of industry experience, now retired and seeking new opportunities. He consults with various organisations, from small businesses to large retailers and government institutions. Bernard is passionate about helping companies optimise their operations through innovative POS technology and enabling seamless customer experiences through effective software solutions.

Maintaining a healthy retail profit margin is more crucial today as everything is changing now. Suppliers are adjusting prices that were artificially kept low during the COVID-19 pandemic. Additionally, with inflation, higher hidden taxation, and persistently high interest rates, SMB retailers are facing increased costs, which is causing erosion of their profits.

Why Margins Matter

A margin is the difference between your cost and selling price. Any drop will have an impact on your profitability.

How to Review and Track Margins Effectively

Establishing a Proactive Margin Review Process

Margin protection starts with how often and how thoroughly you review your numbers. Relying solely on ad-hoc checks from time to time is a dangerous approach. With a POS system, it is easy and quick to do so. Why not schedule a monthly margin review for your shop? This will allow you to identify pressures early and take corrective action before profits slip away.

Leveraging POS Technology for Margin Protection

Modern POS systems can simplify margin management. For example, reports like “Quantity On Hand and Price Check” display your margins in a clear, list format. Use this report to identify low-margin items quickly. Then ask yourself why they’re so low.

I find it better to do it department by department.

Regularly reviewing this report empowers you to take timely action and protect your profit margins.

Ready to Protect Your Retail Profit Margin?

First, you must look into your business and run the numbers.

Now I suggest you run "Quantity On Hand and Price Check" report.

This shows your margins. It makes it quicker to check as it is in a list.

Benchmarking: Stay Competitive

Don’t operate in isolation. Checking your figures against those of similar retailers in your area can also be a helpful exercise. If your prices deviate significantly, you need to investigate. A quick walk around the area, plus a study on the internet, can tell you what you need to know.

Action Steps for Retailers

Achieving sustained profitability in retail requires a continuous commitment to margin management. Here’s how to get started:

• Set a regular monthly review schedule
• Leverage your POS technology, have you set up automatic margin tracking
• Review pricing and promotions
• Compare your performance to industry standards.

Improving your profit margins was good, but it's necessary now.

Written by:

Bernard Zimmermann is the founding director of POS Solutions, a leading point-of-sale system company with 45 years of industry experience, now retired and seeking new opportunities. He consults with various organisations, from small businesses to large retailers and government institutions. Bernard is passionate about helping companies optimise their operations through innovative POS technology and enabling seamless customer experiences through effective software solutions.

We have received a few reports of another issue with Linky EFTPOS from people who have installed the latest Microsoft update. We are not sure, as we cannot find any official Microsoft or Linkly statement to confirm the link. 

What we can say is that some report to us that their Linkly-integrated EFTPOS terminals displayed "Pinpad Offline" and some that the Linkly client application is not appearing in the Windows system tray. We think it's a communication error between Linkly and their EFTPOS terminal. 

What I did was to uninstall the latest Microsoft update and then turn off both the computer and the EFTPOS terminal. Then, I started it up again. What I suggest is that if you are experiencing Linkly EFTPOS issues after a Windows update, turn off the computer and the EFTPOS terminal, then turn them on again. If this does not work, please get in touch with Linkly Support or your bank’s merchant services.

Written by:

Bernard Zimmermann is the founding director of POS Solutions, a leading point-of-sale system company with 45 years of industry experience, now retired and seeking new opportunities. He consults with various organisations, from small businesses to large retailers and government institutions. Bernard is passionate about helping companies optimise their operations through innovative POS technology and enabling seamless customer experiences through effective software solutions.

Maximising retail sales requires planning around key retail dates today. Use this retail calendar to prepare for the major sales events in 2025.

Why a Retail Calendar Matters

By mapping out the year’s key sales events and niche holidays, you can:

-Anticipate consumer demand
-Allocate resources efficiently
-Time your marketing to reach customers when they’re most likely to buy these products

Use your POS system in conjunction with this calendar to facilitate historical data analysis, enabling you to make informed purchasing decisions and focus on products that sell well in your shop.

-Analyse last year’s sales data for each event and adjust your approach accordingly
-Automate reminders for stock ordering and campaign launches
-Measure after the return you made for each event

Here are the most critical retail dates for the remainder of 2025.

Retail calendar 2025

Below are the most significant retail events from July to December 2025. Mark these dates in your calendar.

July 2025 (Now)

-Stocktake sales ‍

September 2025

September 7: Father’s Day

-AFL Final season

October 2025

October 31: Halloween

November 2025

Tip of the month: Today, Australians spent more in December than in November, with massive amounts over Black Friday week. Tap into this demand with curated gift guides that encourage product discovery, followed by coveted limited-time deals.

November 4: Melbourne Cup Day

-Christmas season begins

November 29: Black Friday

December 2025

-Christmas season continues

December 24: Christmas Eve

December 25: Christmas Day

December 26: Boxing Day

December 31: New Year’s Eve

Remember, every shop will have unique sales opportunities beyond these events. Review your own sales data to identify additional key dates relevant to your niche. Some I think are worth many considering are:

eg Fashion shops - Winter sales (now)

October 19: National Gardening Week

Click here for more ideas 

Written by:

Bernard Zimmermann is the founding director of POS Solutions, a leading point-of-sale system company with 45 years of industry experience, now retired and seeking new opportunities. He consults with various organisations, from small businesses to large retailers and government institutions. Bernard is passionate about helping companies optimise their operations through innovative POS technology and enabling seamless customer experiences through effective software solutions.

Australian retailers are today exploring AI-powered POS analysis to gain deeper insights from their POS system reports. While AI offers substantial potential, it is crucial to understand its current limitations, especially when integrating it with POS system analytics in today's business.

What I would like to discuss is the issue of utilising the information in your POS System to drive an AI analysis. It is something that my company was one of the first to explore with OpenAI, the creators of what is now ChatGPT, years ago.

Data Quality and System Integration

Like any advice, the effectiveness of AI-driven POS analytics depends on the quality and completeness of the information we give it. If the information you feed it has errors, then I doubt analysis will help. That is why a manual review of the information you are feeding the AI is so critical. It is also why many are saying that now is the best time to utilise AI to review your stock, as the information in your POS System has been verified during the stocktake you have just completed.

These data challenges lay the groundwork for further issues, such as the risk of AI hallucinations, which we explore next.

Hallucinations

Hallucinations are not just an AI problem. In human conversation, topics often drift, leading to another topic. AI can behave similarly, sometimes producing nonsensical or, worse, convincing but incorrect results.

The significant issue here, at worst, is that the AI has said something so convincing that it's difficult to dispute its accuracy. Our clients have sent me such examples.

In contrast, programmers audit traditional POS system reports, which are based directly on actual transaction data and clients' stated needs. It provides you with focused information on the real needs of the business and greater reliability for informed business decisions. An example is a report generated by an AI system, Perlexity, that incorrectly identified a non-existent sales trend a newsagent sent me. If the newsagent had listened to it, they would have ordered a lot of unsellable stock.

Local Market Dynamics

AI systems often lack a sophisticated understanding of local market conditions, regulatory requirements, and cultural factors that significantly impact Australian retail operations. This limitation becomes evident when AI tools recommend a strategy to one of our clients based on an American holiday or season that is of minor significance in Australia. A classic example, which I recently discussed here, was a gardening tip from the US, where the seasons are reversed. An excellent tip for gardening in spring is of little use to an Australian retailer in autumn. 

When you ask an AI for advice, you have, like any other advisor, to tell it of what we call localisation issues that your shop faces. For example, say you are a pet supplier. There is a significant difference in the advice someone would give you if you are a large retailer with a small department for pet supplies or a small business exclusive pet retailer. Before asking for advice, specify as much as possible; for example, it's better to say, rather than

"What can you tell me I should do based on this information?"

say

"My Pet Shop is in the Dingley Village Shopping Centre, which is a well-established neighbourhood retail hub anchored by Woolworths, which generates steady daily foot traffic and creates strong cross-shopping opportunities for specialty stores like my pet shop. The centre's tenant mix is focused on essential services, making it resilient to economic fluctuations and attractive to the local community, which is characterised by above-average incomes and a family-oriented demographic. While Woolworths' in-store pet section, internet and nearby major pet chains present direct competition, the centre's strong local customer base and consistent visitor flow provide a solid foundation for us.

Now, what can you tell me based on the information from my POS System that I am giving you now?"

I find using AI to create such a summary works well. Once you have it store this description as you will often need it once you start analysing with AI. Many AIs allow you to make a character for your shop. I will discuss this more in another post.

The information you get now is much more relevant.

Transparency of the advice

Due to the way AI operates, it's often impossible to follow the reasoning. We call it a "Black Box". We know what we put in, and we see what we get out, but how does it go from in to out? Most of us, if we do not understand the logic, are reluctant to use it, and with the hallucination issue, it may be dangerous to follow its advice.

Historical Patterns

What I love about AI is that it's terrific at finding incredible patterns in your information. Still, it can struggle to adapt quickly to sudden market changes or unprecedented events that it is not aware of. Retail markets often change rapidly, requiring immediate strategic adjustments.

What you need to do here is tell the AI when this happens.

"redo as what you should have taken into account ....blaa blaa blaa........".

Like any advisor, you often need to give them another go if they get it wrong.

AI often requires multiple attempts to achieve satisfactory results.

Technical Implementation and Operational Requirements

Successfully utilising AI analytics for POS data requires some practice to build up your technical expertise. It's not hard, but like most things, it does take some practice. The more you use it, the better results you will get and the more you will get out of it.

Please, based on my experience, the most reliable way to feed your POS data into an AI tool is by exporting reports as Excel or CSV files. Excel is better, but some AIs do not like it. If so, use CSV. Both provide a standardised format that the AI is designed to process. When you supply your information, do not simply import your existing reports to get quality insights. The less you ask the AI to guess, the better.

Creating an Excel or CSV file is simple in our POS System. From any report, press the red arrow.

However, most POS Systems can export your reports into Excel or CSV.

Use Excel or CSV, not the report, which often invites trouble. 

Actionable information

Having extensive volumes of information is rarely much use; what we need are actionable insights. Many experience that when this happens, paralysis reduces decision-making efficiency rather than enhancing it. What I suggest you do is, if the AI does this, ask it, "What actionable steps that directly support our business objectives and operational improvements can you make from this?"

The Essential Role of Your Expertise

For AI today, human judgment is essential. It's your business, your livelihood and ultimately your decision. It's crucial to double-check before making business decisions.

How to use AI for Retail

The key to successful AI implementation lies in viewing its limitations as opportunities for strategic improvement. Retailers who set realistic expectations and thoroughly validate can gain advantages while ensuring operational reliability.

AI is brilliant, but you need to be thinking too.

Written by:

Bernard Zimmermann is the founding director of POS Solutions, a leading point-of-sale system company with 45 years of industry experience, now retired and seeking new opportunities. He consults with various organisations, from small businesses to large retailers and government institutions. Bernard is passionate about helping companies optimise their operations through innovative POS technology and enabling seamless customer experiences through effective software solutions.

How to Calculate Inventory Shrinkage and Damaged Goods: 2025 Guide for Australian Retailers

Inventory shrinkage and damaged goods continue to rapidly erode profitability for Australian retailers, making retail loss prevention an increasingly important priority. With your latest stocktake complete, now is the ideal time to calculate these critical rates, as you will never have better figures. Good inventory control transforms a retail business.

Inventory Shrinkage and Damaged Goods

Let's define what we are talking about first. Inventory shrinkage refers to the loss of stock that occurs when actual inventory levels are lower than what your computer records indicate, which we refer to as the perpetual stock. Common causes of losses include theft, administrative errors, and other similar issues.

Goods that, due to damage, cannot be sold at full price are classified as damaged goods.

Calculating your Inventory Shrinkage rate

To accurately determine your inventory shrinkage rate, follow this process that leverages your POS system's inventory management tools.

Begin by establishing your perpetual stock value. This figure represents your theoretical inventory level, as reported by your POS software, before any physical stocktake.

Now you have the physical stocktake that you have just done.

In our POS system, we have a comparison report that automatically provides the figures for losses. Focus exclusively on products physically carried in your store, excluding non-stock sales such as lottery tickets or service revenue, to ensure the calculation accurately reflects inventory movement. We can do something similar with your lotto system, as lotto does have a report of what you should have sold. I will address this in a separate post.

The shrinkage formula is as follows:

=(Perpetual Stock Value) - (Physically Counted Inventory Value)/(Perpetual Stock Value) x 100%

Example

A retailer with a perpetual stock value of $100,000 in a department finds, after the stocktake, that their stock is $98,500, and sales of stock products total $70,000 for the period. The shrinkage rate would be:

=(100,000 - 98,500)/100,000 x 100 = 1.5%

This calculation shows that 1.5% of the stock was lost to shrinkage. That rate, unfortunately, is not uncommon. Some of you may be surprised by how high your figures are. Shrinkage rates have increased this year. They increased the previous year as well.

Industry Benchmark for 2025

The retail shrinkage rate for Australian retailers is about 1.4%.

Every 1% shrinkage causes about a 3.5% drop in profit.

A rate above 2% highlights the need for immediate investigation and remedial action.

Calculating Damaged Goods

The calculation for damaged goods is as follows:

=(Damage Stock Value)/(Cost of Stock Product) x 100%

We refer to this as the damage rate, another significant contributor to inventory loss. These damaged goods cannot be sold at full price.

Looking at them, we can often determine the cause.

Inventory Management and Loss Prevention Strategies

Effective inventory management is crucial for minimising both shrinkage and damaged goods. Analysing losses by category, department, or location allows you to pinpoint where problems are occurring. Recording the reasons for missing or damaged items—such as theft, receiving errors, or poor storage—provides actionable insights for process improvement.

With a modern POS inventory management system, you at least have real-time tracking of the problem.

Conclusion

After determining the overall measurements of your inventory shrinkage and damaged goods, you may want to dive deeper into specific departments by performing this analysis across departments, as well as consider doing it by key items and locations. Using this, you can pinpoint areas of concern. 

Written by:

Bernard Zimmermann is the founding director of POS Solutions, a leading point-of-sale system company with 45 years of industry experience, now retired and seeking new opportunities. He consults with various organisations, from small businesses to large retailers and government institutions. Bernard is passionate about helping companies optimise their operations through innovative POS technology and enabling seamless customer experiences through effective software solutions.