How to do a stock take you can trust.

Stocktaking vs a physical inventory count

They are the same job with different names. In the UK, shopkeepers talk about a stock take or stocktaking. In the US, the usual terms are a physical inventory count or simply taking inventory. Either way, you are counting what you hold rather than trusting the records, so if you are looking up how to do an inventory count for a US store, the method below is the same.

The real distinction is between a full count and a cycle count. A full stock take counts everything at once, usually with the shop closed. A cycle count checks a small section regularly, such as one aisle a week, so errors are caught between full counts. Most shops need both.

Your accountant will usually want a stock value at your year end too, because the stock still on the shelves affects the profit for the year. A careful count gives them a figure they can rely on.

How to prepare for a stock take

Good preparation does more for accuracy than fast counting. Start a week ahead.

• Pick the time. Before opening, after closing or on your quietest day. Counting while customers buy makes the numbers move under you.
• Stop deliveries. Ask suppliers not to deliver on the day, or keep anything that arrives to one side until the count is done.
• Bring the records up to date. Record every delivery received, every return and every write-off up to the moment counting starts. That moment is your cut-off.
• Tidy and group. Put like products together, face up the shelves and move stray items back where they belong.
• Number the zones. Label each bay, shelf run, chiller and stockroom rack, so every area has an owner on the day.
• Decide the units. Count each product in the same unit it is recorded in. If the system holds singles, count singles, not cases.
• Quarantine the damaged. Put broken, out-of-date and returned items in one marked box so they are counted separately.

Counting method: how to count stock accurately

1. Work one zone at a time, left to right and top to bottom, so nobody has to remember where they stopped.
2. Count in pairs where you can: one person counts aloud, the other writes or scans.
3. Count everything in the zone, including back stock above the shelf and items on display or at the till.
4. Count open packs as loose units, and only sealed outer cases as full cases.
5. Put a sticker or slip on each shelf once it is counted, and do not move stock between zones until the end.
6. Have a second person recount high-value lines such as tobacco, spirits, phones or jewellery.
7. Write unknown items on a separate list instead of guessing which product they are.

Tip. Use blind counts. When counters cannot see the expected quantity, they count what is there instead of stopping at the number they expect to find.

Recording your counts

A stock take sheet needs only a few columns: zone, product name, barcode or code, unit, quantity counted, counted by and checked by. Print one sheet per zone, or scan barcodes into a device and add the quantity against each one.

Write the cut-off time at the top of every sheet and keep the originals. If a figure is questioned later, you need to see who counted it and when. Any sale made after the cut-off belongs to the next period, so note it rather than changing the count.

Reconciling differences

Now compare each count with the recorded stock level. The difference, or variance, is counted minus recorded. Multiply it by the cost price to see what it is worth. If the records show 48 tins of chopped tomatoes, the shelf holds 42 and each tin costs £0.55, the variance is minus 6 tins, or £3.30 at cost.

Sort the variances by value and start at the top. Before you accept a loss, rule out the usual explanations:

• A delivery that arrived but was never recorded, or was recorded twice.
• Two similar products swapped at the till, so one shows a loss and the other an equal gain.
• Cases recorded as singles, or singles as cases.
• Breakages, waste or customer returns that were thrown away without a note.
• Stock sitting in a second location that was not counted.

Recount anything that still looks wrong, then record an adjustment so the system matches the shelf. In POS2026 Stock, an adjustment corrects the level for that product and stays on record, so the next order is written from the counted figure. If the same lines keep coming up short, read our guide on how to reduce shrinkage.

How often should you do a stock take?

Do a full stock take at least once a year, timed for your year end. Many shops add a full count every quarter or every month, and cycle-count their fastest sellers and most valuable lines in between.

Count sooner if you see the warning signs: products the system says you have but nobody can find, a margin that drops without a reason, a break-in, a change of manager or the sale of the business. Moving to a new system is another good moment, because you want to start with clean figures. Our guide to managing inventory in a small business covers cycle counts in more detail.

Stock take checklist

• Date and cut-off time agreed and shared with staff.
• Suppliers told; any deliveries on the day held to one side.
• All deliveries, returns and write-offs recorded up to the cut-off.
• Shop and stockroom tidied, with like products grouped.
• Zones numbered and assigned to counting pairs.
• Count sheets or scanning device ready, plus pens and stickers.
• Damaged and out-of-date stock in a marked box.
• Every zone counted, marked and signed off.
• High-value lines recounted by a second person.
• Variances valued at cost, investigated and adjusted.
• Sheets filed and a date set for the next count.