How are you currently managing your small business inventory?
Many businesses rely on spreadsheets for stock and inventory information. But spreadsheets aren’t really designed for inventory management. For one thing, it requires manual updating – which is both time consuming and error prone.
Without real-time inventory data, it’s harder for you to accurately forecast your inventory needs. Getting caught short with stockouts can lead to lost sales opportunities and disappointed customers. Having too much inventory on hand increases capital carrying costs and storage costs as well as erodes profits.
This is where small business inventory management software, like Sage 50cloud, can help.
In addition to improving forecasting and the order quantity process, inventory management software makes it easy to share real-time inventory status with various teams, such as sales and production.
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Below are eight benefits to consider when evaluating inventory management software for your small business.
Connect front- and back-office systems
How great would it be to give your marketing, sales, finance, and legal teams transparent and up-to-date data about inventory as it relates to each of their functions and each of your customers?
Inventory management software can do that by displaying information and access points related to your company’s inventory items. That includes a summary of item information, access to recently used inventory reports, and a graphic analysis of how the cost of sales is trending.
In addition, software makes it easy to perform a specific task by displaying a clear inventory management flow.
Go beyond quantities on hand
Many small businesses (especially small manufacturers) need to process large quantities of information about individual inventory items or services.
Here are some key tasks inventory management software can help with:
- Perform quick research and comparisons so you can make good stock-reordering decisions.
- Understand the relationships between quantities, usage, and complex assembly processes.
- Understand the performance of an item/service while moving through your sales and purchasing processes.
Consider the example cited by Sage 50cloud customer Jeffrey Burgess: “It’s not enough to know that I have ‘x’ sheets of laminate or particle board. I need to track what apartment complex bought what color, and what size cabinets the particle board was used to build. I have to have the ability to take the raw materials and turn it into inventory, and Sage 50cloud lets me do that.”
Accommodate your costing method of choice
Whether you use inventory management software or not, your business will have selected its costing method, which has crucial tax implications. Software should support your costing method of choice, whether it’s first-in, first out (FIFO); Last-in, First-Out (LIFO); weighted average; or specific unit.
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Offer robust reporting capabilities, including templates
Keeping track of the amount and cost of inventory is a key functionality of any software, so any system you choose should have a strong roster of reporting templates.
Examples of industry-specific reports include assembly planning, production schedule, and component pick list.
Easily record inventory adjustments
Occasionally, you may need to record adjustments to on hand quantities of inventory items. Software should make it easy for you to make these adjustments and track them.
Set up and execute quantity discounts
Software should let you set up your inventory so that when a customer purchases a specified amount of an item, its sales price is discounted by a percentage or a set amount.
For example, you could give customers a 10% discount if they purchase 50 or more of a certain inventory item.
Establish multiple price levels
Software should let you set up price levels that charge different prices to different customers.
For example, a regular customer who buys large quantities of an item may get a better price than the occasional customer who only buys one of that same item.
Be easy to use and deliver strong return on time invested
In terms of the effort, you or your staff need to invest before you begin to see results, inventory management software should give you a big payoff from minimal effort.
Among the other functions it performs, Sage 50 adjusts inventory levels each time you post a purchase or sale of an inventory item. It also tracks the cost of each item on a daily basis, based on the transaction date and item class.
Take control of your inventory management with Sage 50cloud
In Sage 50Cloud, getting to the point where you can track inventory in these ways is basically a three-step process:
- Enter the item information, including sales account, inventory account, and cost-of-sales account.
- Use item codes when entering purchases and sales.
- Enter adjustments, if necessary, through an inventory-adjustments feature.
Ready to learn more? Take a test drive of Sage 50cloud today.
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