Sage 100 Inventory Management and Year End

While this article primarily addresses year end inventory habits that will make you more successful, many of these items also apply to your month end closes in Sage 100. Keep that in mind because it is important! If you implement some of our recommendations every month then your physical year-end inventory will be painless.

Inventory is usually the most important part of the physical closing versus the financial closing.  For reference, the financial closing is all about when you received your last invoice. For the physical part of it, obviously the count is super important. However the count is only going to be as good as the work that goes into it.

With our clients, we always talk about the housekeeping that needs to be done prior to any physical closing because this is where you will save the most time. This housekeeping needs to be done in several Sage 100 modules leading into year end. For example, we need to make sure that everything for which a purchase order has been opened and received is entered into the system in order for it to be physically counted. 

More specifically, we have to make sure that on the purchase order side we have all our receipts for anything that is going to be counted in inventory. Without doing this correctly, you will affect your costing and count. If we're on average costs, this has a direct effect on the cost of the product across all tiers. For LIFO, FIFO, serial, and lot, it also has significant costing as well as count implications.

Continuing with the housekeeping, the same thing has to be done on the sales order side. We have to get our last invoice for the fiscal period entered in the system, updated, and out the door. This means all sold products will not be counted in inventory.

Those are generally the most important parts of taking inventory. If you get your housekeeping done correctly then you’ve got everything cleaned up and in order. Now you're ready to go and do your count. 

For Sage 100, the count is different than in QuickBooks as well as many other systems. There are distinct advantages to an inventory count in Sage 100. First, you can take a snapshot and freeze the inventory. That snapshot is what you're actually entering your accounts against.

The snapshot is critical. After all the housekeeping has been done you take that snapshot, you freeze the inventory, and count and enter your inventory into the system. Now you can start to physically work again. You can start your shifts and the whole world doesn’t need to stop while a small part of the team is reconciling  year end. That's a big deal! Usually, when you hit year end, you stop for a couple days to take inventory and then things need to gear back up again (and it’s slow to start!). You might lose a week, maybe two. 

The snapshot inventory feature in Sage 100 saves your team a tremendous amount of time when used properly. 

Short of the snapshot inventory feature in Sage 100, the biggest thing you can do to really improve your physical count is the utilization of barcoding. Of all the places where barcoding is considered a quick fix, year end inventory counts are the one place where barcoding will absolutely save you time and labor. Now with the way Sage 100 handles the general ledger accounting, you've got a value in inventory even though you haven't received the AP invoice. This is a big deal because the AP invoice might not show up until January 15 and you certainly don't want to hold up processing for two weeks at the end of the year waiting for the invoice.