June 28, 2019      2 min read

With the surge of eCommerce, retailers are facing extreme pressure to maintain profit margins. In fact, poor inventory management has been a leading factor in how many businesses collapse. Proper investment in inventory control is a necessity to avoid losses and to sustain profitability. This is where the relationship between sales and inventory control is important because a business owner can only know what inventory stock is available if what has been purchased and what has been sold is known.

Proper recording of sales lets the business owner know when inventory stock is running low, whether this should be reordered, if so, how much to purchase and so on. Accurately recording a sale every time fundamentally eases this planning process with the aid of a sound inventory management system. It can help identify issues such as under-stocking items and over-stocking items that can directly affect cashflow. In turn, this helps the business owner keep track of the profitability of a business and make decisions about the future of the business.

Level up with better inventory management

Having a sound inventory management system has many benefits associated to sales and inventory. Take for example, when a sales team member records a transaction, inventory stock balances are adjusted. The only other circumstances in which a product is removed from inventory stock at the point of sale are damage or theft. To properly allocate income and loss, the connection between sales and inventory management must be strong, and team members must adhere to any inventory stock requirements regarding sales, damages and theft.

A reliable inventory management system is not only essential to keep more accurate levels of recorded inventory sales, but more so when coupled with the complexity of other sales channel. Most POS systems are integrated with an inventory tracking system, for example using barcodes or RF tags to ensure each product is properly accounted for. As long as each item gets properly scanned or recorded, inventory stock levels will be accurately maintained. Damaged items must be removed from recorded inventory stock levels and the same for items lost through possible theft — in a controlled way by authorised team members.

Fostering the relationship between sales and inventory

Although there are other ways of adjusting for inventory stock levels post-sale, best practices create a follow-up POS procedure and promote a strong understanding between sales team members and inventory management team members. While a separation of duties is important for maintaining checks and balances, each department needs to understand all related procedures at a level that is appropriate. This way sales and inventory management departments can work together to ensure that items are being properly accounted for. Otherwise, inaccurate sales figures and inventory stock levels can lead to inaccurate earnings statements that ultimately affect the business’ bottom line and future.

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