Keeping accurate and updated inventory records is crucial to cultivating a thriving jewelry retail business. Inventory records inform your buying and reordering of merchandise, provide insight into what’s selling and what’s not, can deflect internal theft, and more.
Inventory records are also important in the event of a robbery, fire, or other loss. If well-kept, your inventory records will prove what inventory has been lost—and its value—so your claim can be settled quickly (and if you can’t prove your missing items existed, the payment for your loss may be delayed or possibly denied).
Here’s a handy guide to organizing and storing your inventory records:
- Adopt and maintain a perpetual inventory system that tracks every item for sale, from the time you receive the merchandise until you are no longer responsible for it. Here’s a detailed explanation on how to do that from Jewelers Mutual Group (which publishes The Zing Report).
- Ensure your inventory records contain a detailed listing of all owned stock for sale, customers’ goods, property of others (including customer, consignment, and memo goods), scrap gold and other metals and merchandise temporarily away from your store.
- Keep purchase invoices, sales receipts, inter-store transfer records, and an annual physical inventory list of all your stock.
- Update your records regularly and be exact and accurate in your record keeping.
- Perform a detailed and itemized listing of your physical inventory at least once a year. Inventory or jewelry lines carried by salespeople should be included in the annual physical inventory.
- Make sure your accountant has reviewed your inventory system.
- Maintain certifications and grading reports in a separate location from your diamonds/colored stones.
- Develop an inventory identification system that assigns a unique inventory number to each piece of jewelry. Even though two items may have identical makes and prices – for example, two watches – each should receive its own inventory number.
- Maintain purchase invoices of all items.
- Maintain a record of the cost of component parts for manufactured (assembled) items.
- Maintain sales receipts that identify items sold by inventory numbers, descriptions, or some other method that will trace the items to the listing of the physical inventory and the original source documents (i.e., purchase invoices).
- Store a copy of your annual physical inventory records off premises.
- For a computer-based perpetual inventory system, back up your files on removable media and store the media or use cloud storage (if you use a manual perpetual inventory system, keep your records separate from your merchandise).
- Store all your records, including purchase invoices and sales receipts, in a fireproof container or safe that does not hold merchandise.
- Keep your inventory records for a minimum of seven years. If you have stock older than seven years, keep the inventory records for that stock until the items have been sold. —Jessica VandenHouten
See Jewelers Mutual’s complete Inventory Record Keeping Guide for more tips
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