Stock Count & Reconciliation

1. THREE WAYS TO COUNT

When you start a new count (Inventory → Reconciliation → Physical Count), you choose a count type to match the scale of what you're doing:

• Full Stock Count — every item, every location in scope. The complete, ground-truth count.
• Cycle Count — a rotating subset, typically by category, so you count a slice on a schedule instead of shutting the whole business down once a year. Once a category is counted and approved, the system automatically marks it "due again" for the next rotation, so you always know what's overdue without tracking it by hand.
• Spot Check — a small, ad-hoc sample, for a quick sanity check on specific items without launching a full session.

You'll also set: Location, Category, Count Sheet Type, Max SKUs per Sheet (for splitting a big count into manageable printed/handheld sheets), a Responsible Person, and a Start Date.

2. STARTING A COUNT — WHAT HAPPENS TO SALES/PURCHASES MEANWHILE

Counting physical stock while the business keeps selling and receiving is a real problem for accuracy — so you get an explicit choice:

• Freeze Transactions — pause changes to the items being counted for the duration of the session, so the count and the system number can't drift apart mid-count.
• Continue Transactions — keep operating normally. The system tracks "Transactions During Count" separately, so you can see what moved while counting was in progress and account for it. A business that can't afford to stop selling during a count isn't forced to pick between accuracy and staying open.

The system already knows the expected quantity for every item in scope (System Stock, auto-filled) — you're only ever entering what you physically see, item by item.

3. RECORDING THE COUNT

For each item on the count sheet:

1. Enter the physically counted quantity.
2. Anything that doesn't match System Stock is automatically flagged as a discrepancy — you don't have to manually mark it.
3. Enter a Discrepancy Reason where relevant, so a variance isn't just a mystery number later.
4. For items nearing or past their Product Expiration Date (batch/lot tracked items), a dedicated "Action for Expired Products" step lets you record what happened to them right in the same session — Dispose, Return to Vendor, or Adjust Quantity — instead of running a separate process afterward.
5. Auto Reconcile is available for straightforward sessions where you want the system to apply matched items automatically and just leave true discrepancies for manual review.

4. APPROVAL — THE GATE BEFORE ANYTHING TOUCHES YOUR BOOKS

Recording a count does not, by itself, change any stock number. A separate approval step is required, and the approver chooses exactly what to apply:

• Approve reconciled items only — apply the count for items that already matched or have been resolved.
• Approve discrepancy items — apply corrections specifically to the items that didn't match (the ones that actually need fixing).
• Reject / close with no stock change — close the session for the record without touching any stock number at all.

When a correction is approved, the physical count becomes the authoritative truth — it overwrites the system quantity rather than being added or subtracted like a normal transaction. The dollar difference between the old and new stock value posts automatically to the general ledger as an inventory gain or loss, so your Balance Sheet inventory value and your count results always agree, with no manual journal entry required.

5. HOW IT CONNECTS TO THE REST OF THE SYSTEM

• Every stock change from an approved reconciliation lands in the same central Inventory Transaction Log as every other movement in the system, tagged with the count/reconcile ID — so any number you see later traces back to exactly which count session changed it.
• Cycle Count categories reset their "due for recount" status automatically once approved, keeping your rotation schedule self-maintaining.
• Discrepancy trends across sessions show up in Reports, so you can spot a location or category with a chronic shrinkage or data-entry problem.

6. WHY IT SCALES FROM SMB TO ENTERPRISE

Quick Reference

  Start a count ............................ Inventory > Reconciliation >
                                             Physical Count
  Ongoing count sessions ................... Inventory > Reconciliation
  Approve a count .......................... Open session > Approve
  Related: Stock Adjustments ............... Inventory > Adjustments (for one-
                                             off corrections outside a formal
                                             count)