What is Inventory Counting?

An inventory count, or inventory counting, is the practice of counting or tracking items that are in stock in your warehouse and awaiting sale. Though counting inventory is sometimes perceived as a simple task, there’s a lot that goes into the process.

Many businesses find it difficult to manage regular inventory count because it typically involves a lot of personnel and cumbersome equipment. Without the proper software, traditional physical inventory counts can take a whole day, weekend, or week, depending on the size of the business and the number of staff members assisting with the count.

In this article, we’ll explain what inventory counting is, the importance of inventory counts, and what you need to do to prepare for an inventory count.

What is an inventory count?

Inventory is a term used to describe items that are available for purchase. Performing an inventory count is counting or tracking items that are in stock in your warehouse or stockroom. With inventory counting, companies will use a predetermined method to count the inventory.


Why is inventory counting important?

Inventory counting is important for a variety of reasons. First and foremost, a good inventory system can be the difference between a successful business and an unsuccessful one. If your business isn’t 100% sure of what you have in stock, you could potentially lose sales if there isn’t enough of a particular item in stock. Alternatively, for businesses with perishable items, not being aware of your inventory and over-ordering can result in shrinkage and therefore result in unnecessary business costs.


Businesses also need to know their assets for tax purposes. If your company is publicly-traded company, you will need an accurate record of inventory. As a business owner, you want to be aware of the total value of your business at all times. This includes equipment, stock, and more.

Though inventory is typically counted at the end of a reporting period, how often a business performs an inventory count varies. The cadence of your business’s inventory count depends on the size of:

  1. Your business
  2. Your warehouse
  3. Your companies needs

Regardless of the cadence, implementing an inventory counting software solution will improve your business operations by reducing the time and money spent on performing a full inventory count. At the same time, an inventory count improves stock accuracy and reduces shrinkage.

Having an accurate knowledge of inventory allows for more accurate quantity to order for restock. Over-ordering is common, but that leads to higher carrying cost and depreciation/loss of stock over time. Additional objectives of an inventory count include:

  • Assisting in forecasting an accurate budget: Companies that use a precise inventory counting process can prepare accurate budget forecasts for their upcoming reporting period. This includes planning their budget for the next period’s inventory orders.
  • Managing and monitoring theft and preventable loss: A precise inventory counting process allows companies to catch any inventory discrepancies due to missing, stolen, lost, or broken items.
  • Reporting earnings to stakeholders: Precise inventory counting allows companies to have an exact value on their business and report all earnings to their team and stakeholders. If your company is publicly traded, you need to provide your stakeholders with accurate inventory reporting.
  • Improving your shipping: You never want to lose your customers’ trust by providing inaccurate shipping times. With an accurate inventory count, you know when to expect deliveries so you don’t end up keeping customers waiting if you’re out of an item.

How to prepare for an inventory count

Preparing for your count can be just as important as the count itself. Make sure you do the following before you complete your inventory count:

  1. Make a plan: Before you begin your count, you need to decide what stock you want to take count of. Are you doing a periodic inventory count, a cycle count, or a full stock count?
  2. Choose the method of inventory counting: Part of your plan should also include whether you’re counting your entire inventory yourself, or you’re having assistance from a third-party company. PureCount offers either a partnered inventory count or a full-service inventory count.
  3. Choose your inventory counting date: Inventory counting can be time-consuming, so pick a date that has a minimal effect on your business operations.
  4. Select your staff to take inventory: Whether you’re counting your inventory yourself or you’re doing a partnered inventory count, you will need to figure out which staff can do the counting. If you choose to do a manual count, it may be more economical to hire and train temporary staff for inventory counting purposes.
  5. Alert all suppliers and staff: Suppliers, partners, and storage locations should know your inventory date in advance. Early communications allow your suppliers and storage locations to make alternative plans for the day if need be.
  6. Complete all training videos: If you’re using an inventory counting solution, complete all required software training videos well in advance to ensure complete accuracy.
  7. Update all software and counting applications: Counting solutions that integrate into your systems and can be used on any device is convenient and efficient. This being said, before your scheduled training day you should ensure the software is updated so it can perform to the best of its ability.

What technology is used during a PureCount inventory count?

Traditional, manual inventory counting is done using a pen and paper. For this reason, manual inventory counting is time-consuming and prone to human error. If you choose to use an inventory counting solution, such as PureCount, the technology used during the count will be the following:

Barcoding: Using barcodes is one of the most accurate methods to track your inventory levels and their movements. Codes (collectively referred to as barcodes), are the product number or barcode number used for verified inventory counts and are a related field within Transact.

Transact: Transact is a data capture app specifically designed for inventory accounting. It’s used in-conjunction with Administrate, the web app for inventory count management. With barcode scanning and voice-recognition options, Transact replaces the traditional, cumbersome and inaccurate methods of inventory counting. Transact saves all inventory data and transfers it to Administrate as the count progresses (depending on the strength of the data link).  Customers report Transact is up to 94% faster than their previous solutions!


How to streamline physical inventory counts with PureCount

PureCount’s intuitive software integrates with your system and makes inventory counting fast, accurate, and affordable. PureCount is available on any iOS or Android device, so custom hardware not required.

PureCount uses secure integrations, voice recognition technology, and variance analysis to create detailed reports that can be analyzed anywhere in the world.


Transact is available on any iOS or Android device.


Interested? Learn more about PureCount and which plan is best for your business.


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