Well, sports fans, we’re on the home stretch of our five part series entitled “5-Steps to Successful Inventory Management.” Today we discuss the fourth step: Auditing Receipt of Invoices. Of all the five steps (order process, communication, receiving inventory items, audit invoices, and reports), auditing invoices and vendor deals is the last chance in the cycle to be certain your vendors’ invoices are accurate.
The following are 5 tips to consider when auditing invoices and vendor adjustments:
- Verify cost and retail extensions. When deliveries are made store personnel should have either a pre-printed invoice or, if checking by hand-held scanner, an invoice should be printed using the store’s pricebook cost. Instant verification while the delivery driver is still in the store will set the tone for your relations with the vendor in that you have a real time system in place to verify invoiced items. Remember in your 20s (or perhaps last week), when you were too busy boozing and schmoozing to check your bar tab at the end of the night…only to discover the next morning that all of those cocktails your friends kept pushing your way (and theirs!) were actually going on your tab? Don’t be that guy. Check your receipts…before your friends and, in this case, your vendors leave the building.
- Verify cost and selling price. Whose cost and selling price is right? Yours or your vendor’s? Make this all about you. After all, it is your store.
- Rebates, Buy Downs, Allowances…Oh My! Rebates, Buy Downs, Allowances, Mark ups, Mark Downs…they all affect the inventory value. Don’t forget to account for any items affected. Cigarette rebates in our industry are critical to your bottom line, so be sure you have a policy in place to track your rebates.
- Stick to the plan. Most importantly, be sure to have a policy and procedure in place to account for any cost and selling price changes which will affect your inventory valuation. OK, so you find an error on an invoice…now what? Be sure your store personnel know what the next steps are. In Washington this pre-season, All Pro tackle, Albert Haynesworth, came into training camp out of shape and assumed, as in the past, no one would be checking up on him. But with a new coach who is excellent at establishing and enforcing the rules, Haynesworth learned the hard way what it was like to play with the scrubs last weekend in an exhibition game. He was not amused. Likewise, when you set the rules and encourage your employees to follow through, your vendors will know you intend to be the head coach of your store. They must play by your rules or get out of the game.
- Post the items to inventory with all adjustments and corrections. You have worked hard to build a solid foundation with the previous four steps, so go ahead and post your items secure in the knowledge that you have an extremely accurate inventory valuation in place.
Next week, we will wrap up our 5-Steps to Successful Inventory Management series as we discuss reporting and the information you need to know in order to achieve success.