What Is an Inventory System and Why Do I Need One?

What is an inventory system?
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In the business world, there are two types of inventory systems: periodic and perpetual. A periodic system checks the quantity and cost of inventory on hand at specific points in time. A perpetual system uses software to keep a running total of inventory on hand. In this post, we’ll explain what each is and why you need one if you’re starting a small business or running an existing company. We’ll also discuss how using technology can streamline your business processes, save hours every week and to ensure you stay compliant with tax regulations!

Two types of inventory systems: periodic and perpetual.

Two types of inventory systems exist: periodic and perpetual. Periodic systems check the quantity and cost of inventory on hand at specific points in time, known as cycle counts (typically done monthly), while perpetual systems use software to keep a running total of inventory on hand. Adding accounting automation can help track accurate quantities and cost of sales, which makes it easier for managers to forecast purchases and plan effectively in general.

Periodic Inventory Systems

If you’re using a periodic system, you will perform cycle counts each time your company experiences significant changes that impact your inventory levels—for example, when new product shipments arrive or when there are large orders placed by customers or vendors. The results from these counts are used to adjust price levels up or down so they reflect current market conditions. You also may receive feedback reports from suppliers indicating how much product was sold through them during periods between count dates (i.e., “what do I owe this guy?”).

A periodic system checks the quantity and cost of inventory on hand at specific points in time.

An inventory system is a tool that helps you keep track of and manage your physical or digital inventory. A periodic system checks the quantity and cost of inventory on hand at specific points in time, typically monthly or quarterly. This is done by taking a physical count of products on hand using a handheld scanner, or by entering quantities into an online system (such as Synder).

A periodic inventory can help you identify when there’s too much stock so you can sell it before it goes bad; however, it doesn’t provide real-time visibility into how much product is going out the door. Automation like Synder can help businesses better track quantities sold, cost per unit and other useful metrics so they’re always aware of what’s selling best—allowing them to make smarter decisions about reordering their goods. Synder also has built in inventory on its platform so you can gain additional understanding of your sales with Synder Insights. The best part of it all is that Synder has automation, insights, inventory tools, and more, all in one place!

A perpetual system uses software to keep a running total of inventory on hand.

Perpetual systems are more expensive, but if set up correctly, may be more accurate.

Perpetual systems can also be used for inventory tracking as well as financial management. If you’re going to use your system for both accounting and inventory control purposes, this type of software will probably be a good choice for you.

Perpetual systems can be difficult to set up and maintain. It’s suggested to work directly with an inventory software vendor, get certified on the software (that is what we do as bookkeepers), and bookmark the Help Site! Hopefully this article has given you a good understanding of how perpetual systems work and why they might be right for your business needs!

Tracking products with spreadsheets can lead to lost sales

In a small business, an owner is often involved in the day-to-day bookkeeping, or hires a seasonal or part-time bookkeeper to help. This means that clients are using spreadsheets to track their products.

However, if you are working with multiple people who all have access to these spreadsheets and want to know what is in stock at any given time, the information becomes unreliable very quickly. If someone enters an item as sold but forgets to update the inventory list, it can lead to lost sales when another client comes looking for that item only to find it’s not available anymore!

An inventory system will allow you to keep track of how much is on hand so there are no false claims about what’s left in stock (and no upset customers). By streamlining your technology with an inventory system or automation that tracks product quantities and cost such as Synder’s Ecommerce automation & inventory tools, you can save hours each week, avoid costly mistakes and stay compliant with tax regulations.

You can save hours each week by streamlining your technology with an inventory system or automation that tracks product quantities and cost. With Synder, your costs, inventory quantities, and more are synced automatically. Set it and forget it! You’ll then be able to avoid costly mistakes, stay compliant with tax regulations and keep track of what you have in stock so that you never run out of an item or undersell yourself!

The more accurate your inventory system is, the more profitable your business will be.

Any business owner knows that keeping inventory on hand is a necessary part of their job. But what many don’t realize is that an effective, accurate inventory system can also help them save time and money in the long run.

Here are some of the ways an accurate inventory system can benefit your company:

  • It saves you time by ensuring that you have exactly what you need when it comes time to make your products or fulfill orders. This means less time spent running around the warehouse looking for materials, and more time doing other tasks (like selling your products).
  • It helps prevent costly mistakes because it makes it easier to know exactly how much stock is available before placing an order or making a purchase decision. An inaccurate count could lead to either running out of product before expecting customers arrive, or having too much stock on hand at any given point in time—both situations will cost you money as they require additional labor hours spent ordering more inventory or taking back unwanted items from customers who were promised something completely different than what they received.
  • An efficient method for tracking all incoming and outgoing deliveries will help keep track of all tax requirements related specifically towards sales tax laws in each state where sales taxes apply (and even those without them!). Without proper documentation showing how much was paid out as total sales tax charges during any given year period then there could be penalties levied against businesses which fail meet these requirements set forth by each jurisdiction’s taxing authority agency responsible for collecting taxes owed by businesses operating within individual states’ borders such as California’s Board Of Equalization office


In summary, we hope that this post has given you a better understanding of inventory systems. There are many different types and the best one for your business will depend on the size of your company, location and industry. If you’re looking for something simple but effective then an Excel or Google spreadsheet might be just what you need; if on the other hand, you have complex needs like multiple warehouses, run an e-commerce store, or have lots of products then something like ERP software might fit better into your workflow. Either way, we hope that this article has provided some helpful tips about how to choose which type works best for your needs!

Ready to see how Synder can help? Try Synder free for 7 days. You can track your inventory, sync transactions to your books, and get detailed insights into metrics that can help you make decisions about your inventory. Reports such as: best selling products, products often sold together, and what products are returned the most often are only a few of the reports you get. Start your free trial or book a demo to learn more!

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