Benefits Of Conducting Annual Physical Inventory

Our Consultants supervise dealership personnel to conduct annual physical inventory. This will be a complete inventory balanced to accounting GL Asset Account. Dealership will be provided certified inventory with supporting documentation.

Without physical inventory the following problems could be hidden.

• Possible theft of parts inventory.

• Lack of control of claims filed for shortages and returns to carline and outside vendors could result in inventory shortages.

Posting errors can occur in accounting office causing inventory shortages.

• Annual Physical Inventory is vital to ensure all policies and procedures relating to dealership investment in parts inventory is protected and dollars are not lost due to theft or poor controls in parts department and accounting office.

• Benefit of Physical Inventory is to ensure dealers investment is protected. If inventory variance falls outside established guides, investigation of causes for variance should be conducted. This will include a review of all parts department procedures as well as review of accounting procedures.

• If physical inventory is within established guides, this indicates dealership has good procedures in place. However, it is recommended that a monthly recap be conducted each month to verify that no unacceptable variances are developing between parts Inventory and accounting inventory.

• It is beneficial to have outside consultants conduct physical inventory to ensure all reconcilable items are accounted for and all procedures relating to physical inventory are followed.

• It is recommended that consultant return in no more than six (6) months. At this time a complete inventory analysis can be performed relating to the following.

  • Review all set ups relating to phase-in and phase-out as well as ordering procedures.

  • Review width and dollar value of part numbers required.

  • Review part numbers to be added.

  • Identify slow and non selling part numbers to be returned to credit.