Digital and mobile inventory with a scanner

All information on the inventory process and tips for successful implementation

What is an inventory, who is obliged to do it, when exactly does it have to be carried out, and what inventory procedures are there?

We will provide an overview of everything you need to know about inventory. But not only that, we will also focus in particular on mobile inventory with a scanner. This is because a digital inventory can remedy many problems and ensures significantly simpler workflows. Paper-based inventory is increasingly being replaced by digital solutions for good reason.

You will therefore, learn how to best implement your inventory and which aspects to consider.

What is an inventory?

Inventory explained in simple terms

An inventory documents all items as well as the debts of a company as of a given reporting date. These items or inventories are considered assets and are recognized by type and quantity. Whereas licenses, industrial property rights, or receivables can be verified by drawing up balance sheets, tangible assets must be weighed, counted, and measured. Inventories are carried out at the end of each financial year as well as when a company is founded, acquired, or closed down. The result of an inventory is used as the basis for the balance sheet.

The difference between taking inventory (the action) and inventory (the physical list of stocks)

Taking inventory describes the process of counting, measuring, or weighing and thus serves to record the stock levels of the company. The physical inventory, on the other hand, is the written result of the actual counting and constitutes the list of all assets including liabilities.

Der Unterschied zwischen Inventur und Inventar

Why does an inventory need to be taken?

How many goods have already been sold? How many goods are still available? Do these figures match the goods purchased or is there a gap between the target and the actual stock levels? To find out, an inventory must be carried out at regular intervals. The difference between the target and actual stock levels must be recognized in the profit and loss account, since only the actual stock is relevant for the balance sheet.

Wann muss eine Inventur durchgeführt werden?

Uniform rules for inventories are required so that auditors can issue their certificate or the tax authorities can check all the information. Legislative provisions on inventories are set forth in the regulations on inventories applicable to the country the company is located in. Taking Germany as an example, the following Principles of Proper Accounting (GoB) must be observed:

Complete inventory (balance sheet accuracy, i.e., correctness of content, completeness, and absence of arbitrariness)
Consistency of the inventory in accordance with § 252 HGB (German Commercial Code)
Accuracy of the inventory in accordance with § 246 (1) HGB (German Commercial Code)
Verifiability as well as clarity (so-called balance sheet clarity, i.e., following a formal outline and structure)
Individual recording of all goods, merchandise, or intangible assets

Taking inventory is required for all merchants and companies that are obliged by their chosen legal form to use double-entry bookkeeping. It doesn’t matter whether the company is involved in retail, hospitality, manufacturing, or warehouse management. In addition, companies that fall under the provisions of the German Commercial Code (HGB) must prepare a balance sheet and a profit and loss account.

An inventory must be carried out by the companies or merchants mentioned here once a year at the end of the financial year. Depending on the type of inventory, the time of execution may be earlier or later than the reporting date. The reporting date is usually the balance sheet reporting date and marks the end of the fiscal year.

Digital and mobile inventory with a scanner

View the demo for free, whenever you have time!

Added value from digital warehouse processes
In the free demo, we will show you how to accelerate inventory taking, reduce search and travel times, and create transparency with regard to your inventories.
Overview of the most important functions
Learn about practical mobile functions including goods receipt, inventory, and how they facilitate daily tasks at the warehouse.
Networked processes with or without ERP system
We will explain how the connection to your ERP system works or how you can also use L-mobile warehouse as a standalone solution.

View demo for free

Software speeds up the counting process: How you can benefit from taking mobile inventory with a scanner

You need exactly three things to get started with a mobile inventory: a handheld scanner, a mobile inventory software solution, and a reliable WLAN at your warehouse.

Your inventory personnel can conduct mobile, paperless, and error-free inventories with the digital software solution, L-mobile warehouse. The mobile inventory is fully integrated into your ERP system. This means that while working on a mobile basis, your employees will be able to digitally view all inventory lists on their barcode scanners together with the corresponding inventory items that have been released by your ERP or inventory management system.

Ablauf der digitalen und mobilen Inventur mit Scanner

Digital inventory procedure

Instead of writing down inventory items on a paper document, your employees scan the item number or the storage compartment with the scanner. The counted quantities are then entered on the mobile interface of the barcode scanner and sent directly back to the ERP system. This eliminates the need to manually enter inventory lists on paper and provides you with all information on the counted inventories in real time without changes in media. Mobile inventory with scanners makes inventory processing and access to inventory lists easier for your employees and reduces the number of work steps. This means your inventory personnel do not have to run back and forth between several areas in the warehouse, but can perform inventory based on efficient routes from shelf to shelf. Since it is easy to use, working with the mobile inventory can be learned quickly. Even temporary staff or new personnel can get started in no time.

Error checking, filtering options, and perpetual inventory

But that’s not all: digital inventory reduces your risk of error at the same time. Thanks to the plausibility check, typing errors and incorrect entries are noticed immediately. Simply define a maximum deviation at which a corresponding note should be displayed. In addition, numerous filter options and color coding make your work easier. Moreover, several people can work on a digital inventory list at the same time without getting in each other’s way. Quantities that have already been counted can simply be hidden.

Digital inventory software also makes it easy to carry out a perpetual inventory. This procedure keeps the time and effort required for inventory taking very low. In this process, the inventory is integrated into the ongoing business process so that stocks are counted whenever it is convenient. Each stock count can be recorded as an inventory count if desired. Thus, at the end of the year, you only have to count goods for which the inventory was taken more than one year ago. Perpetual inventory with a scanner is becoming increasingly popular since it is so easy to do.

Vorteile der mobilen Inventur

Inventory procedures at a glance

The annual inventory must be taken physically. Consequently, during the physical inventory, all items of the company, even worthless ones, must be recorded by hand. For this purpose, there are four options for stock counting:

Measuring

When goods are sold by length

Weighing

When goods are bought or sold by weight

Counting

When goods are bought or sold per piece

Estimating

For goods that cannot be measured, weighed or counted, a reasonable estimate will suffice

To simplify inventories, there is an inventory simplification procedure in accordance with Section 241 HGB, which allows companies to determine the inventory using “recognized mathematical-statistical methods” or on the basis of samples. This is always possible when the “informative value” is equal to that of the physical inventory. The inventory types are therefore clearly defined. The different types of inventory which you can use are annual inventory, inventory sampling, perpetual inventory, and early or postponed annual inventory.

L-mobile Software solutions Warehouse and production Inventory Why is stock taking necessary

Annual
inventory Inventory
sampling Perpetual
inventory

For many companies, annual inventory is the only option

The annual inventory is always carried out on a fixed date, usually the balance sheet reporting date. However, there is also a little flexibility here. The inventory can be taken up to ten days before or after the reporting date. In most cases, operations come to a standstill for the inventory period, since employees are fully committed to physical stock management.

Advantage of the annual inventory: If the inventory was taken on the balance sheet reporting date, an accurate closing without discrepancies will be executed and the physical inventory as well as the accounting inventory will match exactly in the best case.

Drawback in the case of annual inventory close to the reporting date: If the annual inventory was not carried out on the exact balance sheet date, it is referred to as an annual inventory carried out close to the reporting date. Although this means that you can be somewhat more flexible with the choice of date, you must in this case keep an unambiguous record and proof in your stock ledger of changes between the balance sheet date and the date of the actual physical inventory.

Since it is difficult for many companies to carry out an annual inventory due to a lack of personnel or due to the quantity of values and goods to be inventoried, the legal authorities have provided various inventory simplification procedures to postpone the inventory, to collect data on a sample basis, or to carry it out perpetually.

Missed the balance sheet date? Don’t panic, all is not lost!

If, for some reason, you are unable to carry out the inventory on the reporting date and you also do not have the prerequisites for a perpetual inventory, you can resort to an early or postponed annual inventory in accordance with Section 241 (3) HGB. In this case, you can postpone the inventory to any day within a period of three months before or two months after the balance sheet date. However, you will need the approval of the tax office for this inventory procedure.

The stocks determined during the annual inventory which is taken before or after the balance sheet date, are updated or recalculated according to their value. The prerequisite for an early or postponed annual inventory is system support for the inventory procedure in the form of commercial software, such as an inventory management system or an ERP system. However, an early or delayed inventory is out of the question for very valuable or perishable goods.

The rescheduled inventory offers higher flexibility in planning the physical inventory due to the large time window of five months. This makes it easier for you to find a suitable date and to carry out the inventory even more thoroughly.

The best choice for math professionals with lots of small parts: inventory sampling

Inventory sampling does not record the entire warehouse stock. Inventory sampling is restricted to selected and representative samples in the sense of random sampling procedures. This method may only be used by companies with many parts, where it would be impractical to include the entire warehouse stock. After counting the samples, a calculation to extrapolate the total stock is carried out. The sampling error must not exceed one percent of the total data. To calculate the total quantity from the partial quantity, only recognized mathematical-statistical methods, such as mean value estimation, may be used.

The advantage of inventory sampling clearly lies in the tremendous time and therefore cost savings. However, it is important not to underestimate the mathematical knowledge needed to determine the samples in this case. In addition, inventory sampling can never provide an accurate overview of the actual inventory.

Concurrent inventory: The perpetual inventory records the stocks as a part of everyday work

A perpetual inventory in accordance with Section 241 (2) of the German Commercial Code (HGB) is suitable for ensuring a precise overview of all inventories at all times. In this case, the inventory is recorded over the course of the fiscal year. The prerequisite for a perpetual inventory is a system that facilitates the recalculation and updating of warehouse stock receipts and issues.

The perpetual inventory begins with a physical inventory at a freely selectable time. However, strict standards are set for the records kept on an ongoing basis, since both a properly maintained stock ledger and verifiable documentation of all removals and additions must be available.

The stock levels of all individual goods are perpetually recorded in this inventory procedure by means of a stock card index. This gives you precise information on your inventory at all times. This stock card is created for each item at the beginning of the perpetual inventory. The type, quantity, and value of the individual items are noted. From this point on, all receipts and issues are documented in the stock ledger and recorded on the stock card.

In addition to the continuous book inventory, a physical inventory must also be carried out in the course of the financial year. However, in contrast to the annual inventory, you can freely choose when to do the physical stock counts for perpetual inventory. It is therefore advisable to plan for a favorable time, for example, when the stock or order situation is low or when there is hardly any customer traffic.

In summary, the advantage of perpetual inventory is that stock counts can be distributed over time and do not have to be taken simultaneously. The stocks are counted as part of the daily work routine, thereby reducing the enormous amount of time required for an annual inventory. A digital and mobile inventory with a scanner is perfect for practical implementation. The software makes it easy to carry out and minimizes the work involved in taking inventory.

Use of barcode scanners during inventory taking

Whether as an annual inventory, ad hoc inventory without advance planning, or controlled using key figures in the form of a perpetual inventory—the use of a barcode scanner facilitates inventory taking. And this applies to all inventory methods, regardless of which one you choose.

Inventory with scanners makes stock counts easy

To save you the tremendous administrative workload before and after the inventory, and to relieve your inventory personnel of the cumbersome search for individual items, we recommend that you carry out the inventory with scanners. No more printing endless inventory lists, no more searching for items and manually entering inventory on printed lists, and no more typing the information into the computer afterwards. Does that sound too good to be true? Wrong! The inventory from L-mobile warehouse makes it possible to record all information on a mobile basis, and reports the inventory results with no media discontinuity back to your ERP system or inventory management system.

A software-supported warehouse management solution can also be used to react flexibly to new circumstances within the ongoing inventory. If your inventory personnel arrive at an empty storage compartment, they can use the barcode scanner to post the missing stock with a quantity of 0. Conversely, newly found stock can simply be added via the mobile interface without having to create a new inventory list. L-mobile warehouse includes a plausibility check as part of the mobile inventory process to ensure maximum reduction of incorrect data entry with a mobile inventory scanner.

In the event of large deviations from the target quantity, the system prompts the warehouse personnel to recount the recorded stock. This ensures that no incorrect posting takes place in the ERP system. By working on a mobile basis, safely, and without errors by using barcode scanners during inventory, it is possible for you to make use of external inventory personnel when using L-mobile warehouse. The training required to operate the mobile inventory is extremely easy and intuitive, and the mobile interface guides the user step by step through the inventory process.

Advantages of inventory with a scanner

No printed lists

Clearly arranged filtering options

Easy handling of batches and serial numbers

Fewer errors with plausibility checks

Support for perpetual inventory

Simple operation without much training required

Renting scanners for inventory instead of purchasing

Inventory equipment rental with full service

It’s a problem that many companies are familiar with: The annual inventory is due and suddenly significantly more machine data collection devices and barcode scanners are needed than usual. It must also be ensured that all inventory devices function properly and that there is sufficient battery capacity. This often involves considerable costs for the preparation of the inventory. During certain peak periods, it may therefore be more economical and easier to rent inventory equipment instead of buying it.

We will support you with a rental equipment service. This has many advantages. At your desired date, you will receive up-to-date and tested devices that have already been configured according to your wishes with the appropriate apps and are immediately ready for use. This keeps your preparation costs as low as possible and enables you to carry out the inventory quickly and without errors. Also, you do not have to worry about storing your own equipment, which may quickly become obsolete. You can get scanners for your inventory exactly as you need them, thanks to our rental equipment service. This service is available both for L-mobile customers and when using other software for inventory.

More information

Delivery of rental equipment

at your desired date

Configuration of devices

with the right apps

Current tested models

with powerful batteries

Tips for a smooth and error-free inventory

The processes including preparation, execution of the inventory, and processing of the inventory lists are often identical: Inventory personnel are responsible for counting goods and other items and recording them on inventory lists. To obtain a precise result at the end, it is important that the physical inventory process has been prepared in detail and clearly communicated. Common errors include poor or missing labeling of goods or storage bins, goods in the wrong storage location, unclear units of measure, or miscounting by inventory personnel.

To help you avoid these mistakes in the inventory from the outset, we are providing helpful tips to enable you to successfully do your stock counts.

1. Create an inventory plan
Using a schedule, you can better calculate the time needed for the inventory. This schedule should be established not only for the day of the inventory, but also for the preparation up to the day of the count. Be generous in calculating the time needed for the inventory count and ensure that you match the staffing requirements. Overtime should be avoided not only because of legal requirements, but also for the sake of a correct counting result.
2. Prepare your warehouse for inventory
Which goods are located where? Have all shelves, cartons, and goods been labeled? Are goods clearly marked? Is possible confusion of different goods excluded? Clarify all these issues in advance and establish order in the warehouse. Only in this way can you create the framework conditions for the inventory to be carried out smoothly in a way that will allow your inventory personnel to record the right quantity of the right items and for there to be no double counting.
3. Divide your warehouse and personnel
Define a stock division for the inventory and determine the order of counting. You then divide the warehouse personnel into inventory teams. Communicate clearly which team is responsible for which area.
4. Understandable communication about the inventory process
Discuss how to conduct the inventory with your team and give your employees opportunities to ask questions and clarify any ambiguities. You will only get an error-free inventory if your inventory personnel know what to do.
5. Digital inventory lists instead of paper slips
Are you currently still working with printed inventory lists? Then you should think about switching to digital inventory. Because preparing printed inventory lists requires a considerable amount of time and effort. Once the inventory has finally been carried out, a lot of time is spent on transferring the data to the ERP system. Mistakes can often happen in this process. Implementing a digital inventory is relatively simple and it will allow you to dispense with tedious paperwork.
6. Process all open orders and returns
You can further increase the quality of inventory results by processing all complaints and orders before the inventory is taken. If goods are delivered on the day of the inventory, it is recommended to separate this process from the inventory.

Experience digital warehouse management online or on site at our live events

Register now for free

L-mobile video screen

Impending risks of a lack of inventory

If you do not carry out an inventory, your accounts will be rejected for tax purposes. In this case the tax office will come up with an estimate of your profit and will tend to assess that profit generously in favor of the state.

The auditor’s report ensures that the annual financial statements and accounts comply with the legal requirements and that the management report is complete and correct. The auditor’s report is an integral part of the annual financial statements and informs employees, the supervisory board, shareholders, creditors, and the public about the audit result. If this report is missing, this will not make a good impression.

The following consequences are likely to arise if an inventory is not carried out or if the inventory shows significant deficiencies:

There is a risk that you will be accused of tax evasion.

Criminal consequences may be expected in the event of insolvency.

The auditor may limit or withhold the audit report during a company audit.

Why is an inventory useful?

Four good reasons for taking inventory

Uncovers theft

How many goods were stolen? What goods were stolen in preference to others? What financial damage has been incurred?

Achievement of business objectives

If anomalies in the inventory are identified early, management can take early countermeasures to achieve their goals.

Optimization of purchasing

A perpetual inventory can be used to detect a product shortage in time so you can order more of it next time.

Adjustment of the pricing policy

The inventory provides an overview of best sellers and slow sellers. The selling price can be adjusted accordingly, for example, by lowering the price of items with low demand.

Practical examples for a digital and mobile inventory

Mobile inventory at ERNI

From the paper economy to mobile warehouse management: ERNI Production GmbH & Co. KG supplies companies worldwide with electronic components and performs over 15 processes in its warehouse with L-mobile warehouse. Workflows have been simplified, in particular through digital inventory.

Lay the foundation for digital warehouse management with L-mobile warehouse

Digital inventory and much more connected to your ERP system

L-mobile warehouse ready for Microsoft Dynamics Mobile warehouse management for NAV and Business Central — warehouse ready for MS Dynamics

L-mobile digital warehouse management warehouse ready for SAP Business One — warehouse ready for SAP Business One

Don’t see your ERP system listed? Contact us today and let’s talk about how we can implement digital inventory linked to your ERP system.