Negative inventory is when the inventory level of a stock item in your system shows less than zero. What it shows is that your records are inaccurate. The computer tells you you have sold more of this item than you had in stock.
This can, if not addressed, seriously harm your retail business in a few key ways:
> Reduces faith by you and your staff in your inventory management system. At best, you will waste time second-guessing inventory counts. At worst, it is an advertisement to your staff that you do not know your stock figures.
> It distorts your reports system-wide. These negative stock figures often get included in your information.
> It means you have no stock control on many items.
Common Causes of Negative Inventory
Negative inventory typically arises from these problems:
> Inaccurate manual counts at stocktaking, there is a lot to count, and errors do happen.
> Data entry mistakes by your suppliers coming through their electronic invoices or by people in your shop inputting stock quantities.
> Failing to enter invoices before selling makes problems.
So it is best to correct any negative inventory situations. Here are some best practices for controlling negative inventory:
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 those items that have zero stocks.
I suggest doing it by department so in this example, I picked the dissection (department) tobacco.
Now outcomes a report listing the details of your item, looking at the quantities on hand in the column QOH, you may see items in brackets, see 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.
Now audit these negative items to determine what went wrong in your inventory management system.
Conclusion
With proactive prevention and early detection, negative inventory can be handled. Leverage tools like our reports to stay on top of your stock quantities.
Let us know if you have any other questions!
