The stock take rolls around, the warehouse gets frozen for a day, staff walk the shelves and racking with clipboards and the numbers get typed back into the system. Discrepancies get adjusted. Everyone moves on.
And then, three months later, the same problems surface again:
- Customers are promised stock that isn't there.
- Purchase orders go out for product you technically already have.
- Your accountant is querying inventory values that don't match what the warehouse team is reporting.
The issue usually isn't that your team counted wrong. It is that they were counting the wrong things or counting at the wrong moment.
Here are three stock take practices that most businesses overlook and that make a disproportionate difference to the accuracy of your inventory.
1. You are counting units when you should be counting what you can actually sell.
Most inventory systems are built around unit counts. A carton comes in, a carton goes out, the system tracks cartons. For simple, uniform products that is fine but for businesses dealing in variable-measure stock, such as timber packs, it is not enough.
Consider what happens when the usable quantity inside a unit quietly drifts from what the system believes:
- A food distributor whose 20kg bags have been partially drawn down for samples.
- A manufacturer whose raw material rolls have been partially cut for production runs.
- A wholesale distributor whose bulk containers have been partially used for urgent orders without a system entry.
In each case, the system says the unit is there. It is. But the quantity available to sell or consume is different from what the system shows and the gap compounds over time.
By year-end, your count shows the right number of units. But your yield, your sales commitments and your purchasing decisions have all been based on a quantity that was never quite right.
Best practice: Where your products are sold or consumed by a measure other than whole units, reconcile that measure and not just the unit count. Build quantity verification into your cycle counting rotation for high-velocity or high-value lines rather than leaving it to the annual count.
There are tools out there that supports multiple units of measure across purchasing, inventory and sales, meaning the same product can be received in bulk, stored by weight or volume and sold in a different unit, all tracked consistently.
Your stock take reconciles what your operations team is actually working with, not an abstracted unit count that doesn't reflect commercial reality.
2. Your in-transit stock isn't in your count but it is already in your commitments.
If you source from interstate suppliers, import from overseas or operate across multiple warehouses, you almost certainly have stock sitting somewhere between a supplier's facility and your own right now. It has left the origin. It hasn't arrived yet. And in most systems, it sits in a grey zone: on a purchase order but not yet received.
The problem is it is already influencing your decisions:
- A sales rep sees the open purchase order, knows the shipment is two weeks out and tells the customer it is available.
- A purchasing manager decides not to reorder because incoming stock is showing in the system.
These are reasonable calls but only if in-transit stock is being tracked clearly, kept separate from on-hand stock and reconciled accurately when it arrives.
When it is not, one of two things happens:
- Double counting: the stock gets counted once as a commitment and again when it physically arrives, inflating your apparent position.
- Disappearing receipts: the stock arrives and goes straight to the shelf without being formally received in the system, creating phantom inventory that no one can trace.
Either way, your inventory position is wrong. And errors in in-transit stock tend to be large, i.e. whole shipments, not individual units.
Best practice: Before running your stock take, pull a report of all open purchase orders where stock has left the supplier but not yet been received in the system. Then:
- Confirm quantities and expected arrival dates.
- Check whether any partial receipts have already been processed.
- Treat this as a separate reconciliation step, distinct from your physical count of on-hand stock.
When stock does arrive, the receipt process must be disciplined, i.e. quantity confirmed against the purchase order, variances documented, system updated before stock is put away. Receiving goods and shelving them before processing the system receipt is one of the most reliable ways to create phantom stock.
3. Running your count with open transactions is like counting during a flood.
This is the one most businesses don't know they are doing wrong because the problem doesn't show up until the reconciliation refuses to close.
Here is what happens. A stock take produces a physical count. That count gets compared to the system's expected quantity. Where they don't match, an adjustment gets posted. But that expected quantity is only meaningful if all transactions affecting that stock have been fully processed.
If they haven't, you are comparing your careful physical count against a baseline that is still moving. You post an adjustment to close the gap and weeks later, when those open transactions finally resolve, your adjusted figure is wrong in the other direction.
The three most common culprits:
- Partially received purchase orders: goods have been received and processed but the order line hasn't been fully closed. The remaining quantity is in an ambiguous state in your system.
- Picked but uninvoiced sales orders: stock has physically left the warehouse but hasn't been invoiced yet, so your system still reports it as on hand.
- Pending internal transfers: stock movements between locations, warehouses or storage areas that have been initiated but not yet confirmed. Particularly common in multi-site operations.
This is one of the most common sources of persistent, unexplained inventory drift in growing businesses and it almost never gets traced back to its actual cause. It gets blamed on counting errors, system glitches or staff mistakes instead.
Best practice: Before validating your stock count and posting any adjustments, systematically work through each of the three transaction types above. The rule is simple: none of them should be adjusted around. They should be resolved or, at minimum, explicitly accounted for before the count is validated.
A stock take that closes with open transactions pending is not a clean count. It is a deferred problem.
The pattern across all three
Notice what these three practices have in common: none of them are about counting more carefully. They are about:
- Counting the right things: sellable quantity, not just units.
- Counting at the right moment: with a clean, resolved transaction baseline.
- Counting with a complete picture: including stock that is in transit, not just what is on the shelf.
The businesses that maintain accurate inventory aren't the ones that spend more time on the count. They are the ones whose system supports how their operations actually work.
A clipboard and a diligent team will get you a count. Getting an accurate inventory position is a different discipline.