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Fiona McGuinness14-Feb-2022 09:43:294 min read

A Guide to Managing Stock Losses and Deductions

Stock loss is a major concern for businesses whose revenue and profitability relies on consistent inventory management. Whether through shrinkage, theft, damage, out-of-dates, or sudden changes to market demand; loss of stock can lead to a drop in revenue, so you need to get a handle on your inventory and accountancy to reduce its impact.

As a business owner, there’s nothing more frustrating than when your total inventory doesn’t equate to the volumes listed in your accounts. And if there is less stock in your warehouse or on shelves than there is in your records, you could be looking at stock losses – a problem you’ll need to resolve quickly to avoid disruption and maintain your bottom line.

In this guide, we’re looking at practical ways to manage stock losses, including inventory management tips and the correct way to write off stock that has lost its value. Use the links below to navigate or read on for the complete guide.

Tips on How to Reduce Stock Losses in Your Business

There are many reasons why stock can go missing from within your inventory management chain. Theft, damage, loss, and inefficient record-keeping can all result in discrepancies, causing a disconnect between your actual inventory and the stock volumes listed in your system.

But how do you combat it? And what are the key things you need to consider? Below, we offer several practical tips that you can utilise to reduce stock loss and ensure total accuracy within your inventory and warehouse management system.

warehouse manager using tablet

Invest in Enhanced Security

For retail businesses whose stock is on display to the general public, theft is one of the primary reasons for stock loss. Recent figures suggest that shoplifting accounts for over £5 billion a year in retail shrinkage, which, although it applies to the entire UK, remains an extraordinarily high sum.

While theft is impossible to prevent altogether, there are ways to combat it. Investing in security gates at the entry and exit points of your store is a tried-and-tested means of both deterring and catching shoplifters, while security tags on popular, high-value products can also provide an additional level of protection against thieves.

Elsewhere, security cameras remain a worthwhile investment, and recent advancements in CCTV capabilities mean you can closely monitor most areas of your premises. Staff will also need to be adequately trained on how to deal with thieves, or else you may look to a third-party security firm to safeguard the store on your behalf.

Of course, it isn’t just shoplifters who are responsible for theft-related losses within your business. From a rise in self-scanning theft committed by unsuspecting shoppers to the sad reality of staff stealing goods from your warehouse; you need to carefully and periodically assess your security provision to ensure your inventory is protected from the negative consequences of theft.


Improve Stock Receiving Processes to Reduce Damage 

When stock is in transit, it’s at risk from damage, which can result in sizeable losses should it compromise the integrity of the product. This extends to how inventory items are received at your warehouse or store, with a large proportion of damages occurring when items are unloaded from trucks, crates and packing boxes.

The efficiency of your business’ stock receiving process may not sound like a priority point. But improvements can help to eliminate niggling losses that cost money and impact your inventory management system.

Consider how you currently receive a shipment of new products from a supplier. What improvements could you introduce to reduce losses and avoid damage to stock?

From enhanced staff training to better stock handling and management, there are many ways to improve how items are transferred from transit to warehouse. Oversee the process regularly to ensure that your agreed systems are working, and that staff are adhering to stock handling and health and safety policies.

Reduce Data Entry Errors with Increased Automation

Data entry errors account for a sizeable portion of apparent stock losses and also contribute to unnecessary overspending on in-stock items. Should you or your staff input incorrect figures into the system, it can cause major supply issues and wastage, and interfere with the accuracy of your inventory management system going forward.

Thankfully, compared to the issues above, data entry errors are among the simplest problems to rectify and prevent. By investing in the appropriate inventory management software, you can all but eradicate technical errors of this kind, so your team has a robust platform through which to manage incoming inventory.

A modern inventory management solution not only makes processing stock more accurate – it speeds things up too. By automating processes, you reduce the need for human input, ensuring a greater degree of accuracy while freeing up resources to focus on more important, time-sensitive tasks.

scanning code on cardboard box

Integrating stock control and inventory management software, a is the ultimate tool for merchants, wholesalers and distributors looking to reduce losses and better manage their inventory and warehousing operations. With enhanced automation and a centralised database, such software affords greater transparency and streamlined stock management.

At Intact, we specialise in helping businesses realise their ambitions with innovative software solutions, including ERP and standalone business management tools. For more information or to learn more about your services, visit the homepage



Fiona McGuinness

I've been part of the Intact family for 16 rewarding years. After completing my Business Studies degree, I knew Marketing was a field I wanted to pursue. Prior to joining Intact, I primarily worked in the financial sector, focusing on marketing for credit unions. When I started at Intact, I handled all the marketing tasks by myself. Over time, as our team expanded, so did my role. Now, I specialise in crafting compelling content across various platforms, from blogs to video scripts. No two days are the same, and I thrive on the dynamic nature of my role. Whether it's diving into customer case studies or lead campaigns, I'm driven by the positive impact our solutions bring to businesses. In an age where AI plays a significant role, I remain a firm believer in the power of authentic content. When I'm not working, you'll find me enjoying quality time with my family, sewing, or watercolor paintings.