Planning and carrying out stocktaking efficiently

Carrying out a regular stocktake at your company helps you to determine the current “actual stock” situation. The stocktake covers all tangible goods (physical inventory), intangible circulating assets and liabilities (book inventory) and moving fixed assets, i.e. vehicles, machinery and business equipment (inventory).

At least once a year, on a fixed day, you carry out a stocktake to ensure that the continuous recording of receipts and issues in your inventory management system as well as the bookkeeping in your company is carried out correctly.

To summarise, regular stocktaking at your company:

The annual stocktake not only provides a statement for the tax office. Stocktaking is also a useful tool for your company to review in-house bookkeeping and to compare the target and actual inventory.

Office of the Revenue Commissioners specifies a stocktake for your company if your business is subject to annual accounting records. However, even smaller companies that are not required to prepare financial statements, a voluntary stocktaking process to check the real financial situation makes sense.

Expert tip: don’t just focus your stocktaking activities on the goods in your warehouse. C-goods, these being articles which are not directly involved in the value creation chain in your company, should be listed as well. This refers, for example, to office supplies or cleaning equipment.

In principle, a stocktake is required at different points in time: on specific occasions, for example when a company is founded and when personnel changes occur in management, and on a regular date at the end of each financial year.

For most companies, the financial year coincides with the calendar year, which is why the reporting date for the annual stocktake is specified on your annual tax return. It is often impossible to carry out the complete stocktake in one day. The different types of stocktaking activities therefore allow you to carry out the stocktake before or after the annual reporting date (see stocktake types).

Annual stocktake is the most common type of stocktake. The complete stocktake is carried out on the balance sheet key date itself.

A deferred stocktake carried out a maximum of ten days before or after the balance sheet key date is permissible. In this case, any changes to the quantity and value of stock within these days must be backdated or updated to the actual stock on the balance sheet key date by means of receipts.

Please note: This is not a sample stocktake, which involves accounting for inventory by means of representative samples. Permission to carry out this type of stocktaking activity must be officially applied for at the tax office, and is only approved for very large companies that meet certain prerequisites.

Continuous stocktaking involves recording inventory for different merchandise categories on different days throughout the year. Once a year, on a fixed balance sheet key date, a physical stocktake of all material groups is carried out to compare the target stock with the actual stock. To save resources and time, you can choose a day when stock levels in the warehouse are low.

This is a deferred type of stocktake. In the case of a deferred stocktake, the stocktake can be carried out either three months before or two months after the actual balance sheet key date. However, the actual stocktake on the actual balance sheet key date remains decisive. This must be updated or backdated based on value.

The deferred stocktake makes greater flexibility possible. However, it also contains some pitfalls, since any changes to inventory must be documented exactly for the correct updating or backdating over the months.

Please note: permission to carry out this type of inventory must be applied for in advance at the tax office.

The day for the stocktake in your offices is best scheduled for a period when there is little urgent business in the company.

The same applies to the inventory in the warehouse. Please also note: a good time for physical stocktake is when your stock is low.

The deferred types of stocktake give you some flexibility at first. However, do not forget to plan additional time to reconstruct the stocktake on the annual reporting date. The more days there are between the day on which they were recorded and the annual reporting date, the more work you will have to do.

Depending on the size of your business, stocktaking activities may take a few hours, a day, or even several days. In case of doubt, try to plan a little more time to avoid careless mistakes when working under time pressure.

Many companies even carry out the stocktake outside regular working hours in order to be able to concentrate fully on stocktaking activities.

Weigh up whether you can carry out the stocktake with your own employees or whether it might make sense to appoint stocktake assistants instead.

Even if additional help is another expense, in many cases it is still worth paying for. Experienced stocktake assistants usually complete the stocktake quickly and reliably, while your own employees are able to get on with their own work.

Outsiders also have an unbiased view of the situation in your company, which makes it easier for them to spot discrepancies. If you are having your own employees carry out stocktake, then assign them to a different department, and not to their everyday work environment.

During stocktaking, employees should ideally work in teams of two. One employee writes and the other takes notes. This allows you to minimise errors, and stocktaking proceeds faster.

If you decide to hire stocktake personnel, the temporary staff will usually know all about the standard procedure. You should always remind your own employees of the rules before carrying out your stocktake.

It is advisable to proceed from left to right and from top to bottom when entering articles. Once a team has completed an area, it should be marked accordingly to avoid duplication. The stock lists should be completed legibly and in block letters. If necessary, define guidelines for writing numbers to avoid confusion later.