Inventory management tips to reduce waste and boost margins
The hidden cost of poor inventory management
Overstocking ties up cash. Understocking loses sales. Shrinkage eats margins. For restaurants and retailers, inventory is often the single largest expense — and the one with the most room for improvement.
Start with accurate counts
Schedule regular physical counts — weekly for high-value items, monthly for everything else. Compare your physical count against your system count to calculate variance. Any discrepancy over 2% deserves investigation.
FIFO vs. LIFO
First In, First Out (FIFO) is the gold standard for perishable goods. It ensures older stock gets used first, reducing spoilage. LIFO (Last In, First Out) can offer tax advantages in certain situations but is less common in practice.
Set reorder points
For every item, calculate the minimum stock level that triggers a new order. Factor in lead time from your supplier and your average daily usage. CashSheet can automate these alerts so you never run out of critical items.
Track cost of goods sold
Every inventory movement should automatically update your COGS in the ledger. This gives you real-time gross margin visibility — not a surprise at month-end.
