About Physical Inventory

Physical inventory is the process of manually counting all inventory for a specific warehouse/location. Upon completion of the actual physical inventory, all numbers are then recorded and discrepancies identified and explained. This process provides a factual valuation of inventory.

When beginning to use the system, you might want to run the Rebalance Item Quantity On-Hand utility to ensure that all inventory transactions are being processed correctly, because an actual count of all items in inventory is necessary. This count is reconciled with the item location book count.

If all receipts and disbursements are recorded properly, the physical count equals the book count. If not, some procedures must be corrected for tracking inventory.

Variance reports are available to help you spot the variances so corrective actions may be determined.

The Physical Inventory application helps take an actual count of the items on hand at each location by printing tags/sheets to record the on-hand count of each item in inventory. This count is then entered into the physical inventory system and later compared to the item location's on-hand quantity. After editing and approval, the actual counts are posted to the item location and to the Items record. This posting adjusts both the count and the value of the inventory.

The physical inventory function is done at the warehouse level and can take place simultaneously for multiple warehouses.

Note: An alternate way to help keep track of inventory is the cycle count.