How to Do a Stocktake: The Complete Step-by-Step Guide

The numbers in your system are only as reliable as the last time you verified them.

Inventory doesn’t become inaccurate because of one major mistake.

It shifts gradually a delayed return update, a miscount during receiving, a damaged unit that never gets adjusted.

Each gap feels small in isolation.

Over time, those gaps compound, and decision-making starts relying on data that’s slightly off.

That’s when stocktaking stops being optional and starts becoming an operational discipline.

Stocktaking is the structured process of physically counting inventory and reconciling it with system records.

In this guide, we’ll break down what it involves, when to conduct it, and how to execute it step by step without disrupting daily operations.

What Is Stocktaking and Why It Matters

Stocktaking is the process of physically counting your inventory and reconciling it with the quantities recorded in your inventory management system.

In simple terms, it’s how you confirm that what your system says you have is actually what’s sitting in your warehouse.

It matters because inventory accuracy directly affects how your business operates:

• Purchasing decisions depend on correct stock levels
• Inaccurate counts lead to stockouts or overstocking
• Excess inventory ties up working capital
• Overselling damages customer trust
• Inventory valuation impacts financial reporting and profitability

Over time, even small discrepancies can distort decision-making.

Stocktaking resets that drift and ensures your data reflects reality, giving you confidence in every operational and financial move you make.

Common Causes of Inventory Discrepancies

Inventory discrepancies rarely happen because of one major failure. They’re usually the result of small, everyday operational gaps that go unnoticed until the numbers stop aligning.

Here are the most common reasons inventory records drift over time:

• Receiving inaccuracies – Quantities entered incorrectly when stock arrives.
• Fulfillment errors – Mis-picks, short shipments, or incorrect quantity deductions.
• Unrecorded damages – Broken, expired, or unsellable units not written off.
• Returns processing delays – Physical returns not immediately reflected in the system.
• Shrinkage and theft – Inventory loss that isn’t tracked in real time.
• Manual adjustments without audit trails – Corrections made outside a structured process.
• Timing gaps in system updates – Especially common in high-volume or multi-channel setups.

None of these issues are dramatic on their own. But over time, they compound and that’s when inventory records start drifting away from physical reality.

Types of Stocktaking Methods

Different businesses adopt different stocktaking methods based on inventory volume, warehouse size, and operational complexity. Below are the most commonly used approaches:

Full Physical Stocktake

A complete count of all inventory across the warehouse at once.

Typically conducted annually or during financial year-end to reset overall inventory accuracy. This method provides a comprehensive review but may require temporary operational adjustments.

Cycle Counting

A continuous counting method where small groups of SKUs are counted on a rotating schedule (daily, weekly, or monthly).

This approach helps maintain ongoing accuracy without interrupting regular operations.

Rolling Stocktake

Inventory is divided into sections, categories, or locations and counted progressively over a defined period.

It spreads the workload across days or weeks, reducing disruption while still ensuring full coverage.

Spot Checks

Targeted counts focused on specific SKUs, usually high-value, fast-moving, or high-risk products.

Spot checks are useful for quickly identifying discrepancies before they escalate into larger issues.

When Should You Conduct a Stocktake?

Stocktake timing typically aligns with five structured checkpoints in a growing business.

1. Financial Closing Periods

Purpose: Ensure accurate inventory valuation and cost reporting.

Why it matters: Inventory directly impacts COGS, margins, and balance sheet accuracy.

2. After High-Volume Sales Cycles

Purpose: Recalibrate stock after operational strain.

Why it matters: Increased order volume raises the probability of picking errors and stock drift.

3. During Structural Operational Changes

Purpose: Establish a clean baseline before scaling complexity.

Why it matters: New warehouses, 3PLs, or sales channels introduce new inventory flows.

4. When Accuracy Red Flags Appear

Purpose: Correct inventory drift before it compounds.

Why it matters: Negative stock, frequent stockouts, or mismatches signal reconciliation gaps.

5. As a Preventive Control Routine

Purpose: Maintain ongoing inventory accuracy.

Why it matters: Scheduled monthly or quarterly stocktakes reduce the risk of large adjustments later.

How to Conduct a Stocktake in Sumtracker

Conducting a stocktake in Sumtracker follows a structured workflow designed to maintain accuracy without disrupting daily operations.

Instead of relying on spreadsheets or manual reconciliations, the process moves through clearly defined stages inside the Stock Take module.

Here’s how it works:

Step 1: Create a New Stocktake

Start by creating a new stocktake and selecting the relevant warehouse or location.

At this stage, the stocktake is in Draft mode.

In Draft mode, you can:

• Define basic details
• Add or remove products
• Edit information freely

This stage is about defining scope before any counting begins.

Step 2: Add Products to Be Counted

Once the stocktake is created, add the products you intend to count.

You can add items manually or in bulk.

Defining scope at this stage ensures:

• Only selected products are included
• The counting process stays controlled
• No new products are introduced mid-count

After counting starts, the scope becomes locked.

Step 3: Move to In-Progress and Start Counting

When you're ready, move the stocktake to In-Progress status.

At this point:

• Draft editing is locked
• Products cannot be added
• The counting interface becomes active

Importantly, your operations do not need to stop. Orders can continue shipping and purchase orders can still be received.

The system captures the expected quantity at the moment each product is counted, ensuring accurate variance calculation even while inventory is moving.

Step 4: Enter Counted Quantities

You can update counted quantities in two ways:

• Manual entry
• Barcode scanning

As soon as a quantity is entered, Sumtracker automatically calculates the variance between counted stock and system stock.

You can also clearly identify:

• Counted products
• Uncounted products
• Positive and negative variances

This real-time visibility reduces reconciliation errors later.

Step 5: Review Variance Before Completion

Before finalizing the stocktake, review the Overview section.

Here, you can see:

• Total stock increases
• Total stock decreases
• Impact on inventory value
• Count progress summary

This review step ensures adjustments are intentional and verified.

Step 6: Complete the Stocktake

Once satisfied, complete the stocktake.

Upon completion:

• Inventory levels are automatically adjusted
• Stock valuation is updated
• A historical audit trail is created

The stocktake becomes part of your permanent records, providing full traceability for future reference.

Stocktaking Best Practices for eCommerce Businesses

Stocktaking in eCommerce comes with added complexity real-time orders, multiple sales channels, and fast-moving SKUs. A disciplined approach ensures accuracy without slowing operations.

1. Define Scope Before You Start

Clearly decide which warehouse, location, or SKU group you’re counting. Locking scope prevents mid-process confusion and keeps reconciliation clean.

2. Avoid Freezing Operations Unnecessarily

Modern systems allow you to continue shipping orders and receiving purchase orders during a stocktake. Plan the process so business continuity isn’t compromised.

3. Prioritize High-Velocity and High-Value SKUs

Fast-moving and expensive products should be counted more frequently. These SKUs carry the highest financial and operational risk if inaccurate.

4. Review Variances Before Finalizing

Never treat stock adjustments as automatic corrections. Analyze discrepancies before completing the stocktake to identify root causes not just symptoms.

5. Maintain a Consistent Schedule

Whether monthly, quarterly, or via cycle counting, consistency prevents small discrepancies from compounding into larger problems.

6. Track Financial Impact, Not Just Quantity

Inventory accuracy affects margins and valuation. Always review how adjustments impact overall stock value and cost records.

Conclusion

Stocktaking isn’t just about counting products on a shelf. It’s about restoring confidence in your inventory data.

When your physical stock and system records are aligned, purchasing becomes more precise, financial reporting becomes cleaner, and customer experience becomes more reliable.

Small discrepancies are inevitable in any growing business but without a structured stocktaking process, those small gaps quietly compound into operational risk.

By understanding when to conduct a stocktake, choosing the right method, and following a disciplined workflow inside Sumtracker, you turn stocktaking from a disruptive audit into a controlled operational routine.

Make stocktaking simple and accurate with Sumtracker. Try 14 days free trial!

Frequently Asked Questions

1. How often should I conduct a stocktake?

There’s no single rule. Annual stocktakes are common for financial reporting, but fast-moving eCommerce businesses benefit from monthly or quarterly counts. The higher your inventory turnover, the more frequently you should verify stock accuracy.

2. What is the difference between stocktaking and cycle counting?

Stocktaking typically refers to a full or scheduled physical count of inventory. Cycle counting is a continuous method where small groups of SKUs are counted regularly instead of auditing the entire warehouse at once.

3. Do I need to stop operations during a stocktake?

Not necessarily. With structured systems like Sumtracker, orders and purchase receipts can continue while you count inventory. The system captures expected quantities at the time of counting to ensure accurate variance tracking.

4. What happens if I find discrepancies during a stocktake?

Discrepancies are normal. The key is reviewing variances before completing the stocktake. Once finalized, inventory levels are adjusted to match the physical count, and an audit trail is recorded for future reference.

5. Why is stocktaking important for financial reporting?

Inventory directly affects cost of goods sold (COGS), gross margins, and balance sheet valuation. Inaccurate stock levels can distort profitability metrics and financial statements, making regular verification essential.