We believe a professional stock audit is vital to the success of EVERY licensed trade business. A comprehensive audit provides the operators with all the necessary information and guidance to not only report on historical trading but make informed decisions on how the business should trade in the future.
The largest cost to any licensed trade business is its stock. It’s therefore vital that you achieve the maximum return possible.
A stocktaker should be engaged to help you achieve these returns. Don’t think of them as a cost. On every visit their comprehensive report will highlight savings that could be made, or controls that should be adopted, to save money in the future.
Here’s our list of actions points that should be followed to achieve the full benefit from your stocktake.
A successful stocktake doesn’t just happen…..it’s all in the planning.
Whatever period your stocktake is covering, it’s only going to be as good as the information provided to us and the strict control procedures you’ve followed.
On a daily basis, it’s vital that you have guidelines in place which all your staff understand.
Good stock control applies not just to the managers, but all staff that work within the business.
Get to know the products, how to dispense them correctly and avoid waste.
Know the selling price. You’d be amazed how many clients undercharge for items they sell.
Remember, ANY loss of product is a loss of cash to the business. This needs to be recorded so that adjustments to the report can be made.
Plan your menu. Every dish needs to be costed to ensure you achieve the G.P margin you require.
Be aware of changes to cost prices. Most food items will eventually change in price, and they rarely go down! Items that are in season may rise significantly when the season finishes. Talk with your suppliers to discuss when increases are likely. Make sure you’re able to react, possibly with a change to the selling price, or maybe using an alternative product could be an option?
Avoid waste. Fresh produce of course has a short shelf life. Make sure you don’t over order, and always rotate the stock.
Portion size. Too small a portion and of course the customer isn’t happy, too much and it could be returned as waste. Correct portion size is vital.
Storage. Correct storage of all food items is important. Temperature, humidity, external odours, and poor storage could all lead to possible wastage.
STOCK RECORDS – Paperwork.
Your stocktaker needs to know about ALL of the following paperwork.
Invoices, delivery notes, credit notes, statements. Remember it doesn’t matter whether you’ve paid for the goods yet or not, they all must be recorded as delivered within the stock period.
If you’re part of a group, or have a multi-bar site, then remember to provide transfer notes for all goods that leave or move around the site. They should have stock items clearly detailed, dated, and be signed by the sending and receiving parties.
Ideally this should be available in 2 forms.
A breakdown of all products sold, showing the number of units sold, and the revenue received. It maybe further extended into product group totals, and Food and Liquor allocations.
Daily business done.
Either a manual or computer record showing the amount of business done, split between cash and credit sales. The Stocktaker will look to establish if the Till Sales and the Daily business done are the same.
CASH CHECK AUDITS
If directed, the stocktaker may be required to conduct a CASH CHECK. This procedure calculates the amount of CASH that should be on-site at the time of their visit. To do this the following additional information is ALSO required.
Date and value, with a split between CASH AND CHEQUE.
PETTY CASH RECEIPTS
Any cash payments made to suppliers.
Any product that has not generated a cash sale at the expected level should be recorded as an allowance.
Pipe Clean – the amount of draught beer lost during the cleaning process. A combination of beer initially lost as the cleaning fluid enters the lines, and subsequently when the cleaning fluid is removed and beer is returned to the lines.
Breakages – Accidents do happen. It’s important that they’re recorded (by value and description)
Promotions – Items where the full expected sales value will not be received should be identified.
The following examples are:
- 2 FOR 1 PROMOTIONS
- QUIZ PRIZES
- REDUCED PRICE SALES
- COMPLIMENTARY DRINKS – CUSTOMER COMPLAINT
- MANAGEMENT DRINKS
- STAFF DRINKS
ENSURE YOUR BAR AND STORAGE AREAS ARE CLEAN & TIDY.
A stocktaker shouldn’t be required to tidy the bar before they count. Untidy bars and storage areas increase the time it takes to complete the count. This of course increases our time on-site, which may result in additional charges. It of course also increases the risk of counting errors, which could result in an inaccurate stocktake.
It’s always better for stock to be organised prior to being counted. Fridges full, stocktakers love straight lines! Case products tidy and in one location if possible, empties separated from full.
Always ensure your stocktaker is made aware of all storage areas. Make sure they’re unlocked and nothing is hidden.
Remember places like:
- Staff\management accommodation
- Cash & Carry order that’s still in the boot of the car!
- That special cupboard where expensive stock is stored
- Sheds, garages and outside areas.
BE PREPARED TO SPEND TIME WITH YOUR STOCKTAKER
This is a team effort, 1000’s of items purchased, £1000’s taken, all doesn’t happen without a few queries and questions from your stocktaker. You will need to spend time with them at various times during the audit.
Once a result is reached, in our opinion it’s then that the Stocktaker is most valuable. It’s time to discuss their findings.
- Surplus \ Deficit – Can it be identified where the product variances are from?
- Gross Profit % – Is it within your expectations, can it be improved? Let us advise you.
- Can costs prices be reduced? – Improved purchasing equals higher profits
- Are selling prices in line with your competitors, can a higher price be achieved?
- What about promotions, have they been successful?
- Allowances – They do have an effect on profitability. Can they be reduced?
- The Stocktaker sees many different business models and can offer a wealth of advice and experience.