Adjusting the books after a count: find the cause first

The count is finished and the table shows 38 lines where the books and the shelves disagree. The quickest reaction is to post them all and move on: the books now match the shelves and everybody is happy. The trouble is that each difference was a symptom. A duplicate code, an unrecorded sample loan or a transfer posted a day late will produce the same gap again next month, and a fast adjustment has just buried the evidence.

Step one: sort the differences by cause

Before anything is posted, give every line a category:

• Counting error: a bin was miscounted or scanned twice. A recount settles it and nothing is posted.
• Timing: a document dated just before or after the cut-off. Correct the document date, not the quantity.
• Coding: a duplicate SKU, a wrong code, or the wrong unit of measure (pieces against cartons). Fix the data, and the gap often disappears on both lines.
• Process: goods moved without a document, such as a sample loan, an informal transfer or a return that was never booked.
• Genuine loss or surplus: damage, expiry, theft, or a supplier shortage that nobody recorded.
• Unexplained: nothing found yet.

Step two: investigate by value, with a deadline

You cannot investigate 38 lines equally. Sort by value and by quantity, start at the top and set a deadline, for example five working days. The usual checks are the documents around the cut-off for that SKU, other SKUs with similar codes, samples, returns and transfers, and the last movement date of the bin. Write the cause into its own column in one plain sentence as soon as you find it.

For small amounts a shortcut is reasonable. Lines below a value that finance has agreed can be posted as one batch labelled "unexplained, small", as long as every line is listed. Time is better spent on the big ones.

Step three: post only an approved list

Make an adjustment list with the SKU, book quantity, counted quantity, difference, value, category, cause, owner and approver. Finance and the head of the warehouse sign it. Post only lines on the signed list, with a separate reason for each category so that the books show later what kind of adjustment it was. The posting date normally follows the count cut-off; how the adjustment is treated for tax is a question for your accountant.

An example with three lines

Suppose the list contains these:

• A-1042, book 480, counted 478, difference -2. Two cables were found damaged. Write-off approved.
• B-0412, book 310, counted 296, difference -14. Fourteen pieces went to a customer as samples two weeks ago and no document was made. This is not a write-off: record the sample issue and ask for the pieces back.
• B-0360, book 96, counted 101, difference +5. Five returned earbuds were put back on the shelf but the return was never booked. Post the return, not a surplus.

Three differences, three different entries. Under "post everything", the second line would have become a loss and the third a mysterious surplus, and the real causes, a missing sample register and an unbooked return, would have stayed in place.

After posting

Run the book report again and confirm that book and counted quantities now agree on every posted line. Keep the signed list and the count file together in one folder named by date. Then look at the cause column once a month. If "sample without document" appears three months in a row, the right fix is a rule about samples, not a fourth adjustment. The aim of adjusting is not a clean report today but fewer differences at the next count.

Who decides what

The warehouse proposes the cause because it knows the floor. Finance decides the posting because it owns the books. Neither should approve its own lines alone. For a larger gap, add the owner or general manager; for a smaller one, a signed list is enough.

InventoryHub delivers a gap table with book quantity, counted quantity, difference and value, plus counted quantities arranged by item code for loading into 1C or an ERP, and spot-checks documents to show whether a gap is a one-off or built into the process. The decision to post stays with you.