What Does It Mean to Receive Inventory?
Receiving inventory is the process of adding new stock into your POS system when items arrive from a supplier.
The primary goal of receiving inventory is to ensure that the system’s stock levels, purchase costs, and vendor records are accurately updated to reflect the physical goods that have been received. It is a fundamental, routine task that is essential for maintaining inventory accuracy and proper purchase tracking.
How It Works
The process of receiving inventory can be handled in a few different ways, depending on the capabilities of the POS system:
Manual Entry: For small, infrequent shipments, a user can manually enter the quantities and purchase costs of the received items directly into the system.
Barcode Scanning: A more efficient method involves scanning the barcodes of incoming items. The system automatically finds the product, and the user simply enters the quantity received, which reduces manual data entry errors.
Linked Purchase Orders (POs): The most streamlined method is to “receive” the inventory directly against a pre-existing purchase order. The system automatically pulls up the PO details, and the user can simply confirm the quantities received, making it easy to identify any discrepancies or missing items.
Spreadsheet Import: For large shipments with many unique items, a business might use a CSV or spreadsheet file provided by the vendor to import the product details and quantities, which is much faster than manual entry.
What’s Recorded When You Receive Inventory
When inventory is received, several key pieces of information are recorded to provide a complete audit trail:
- Quantity Received: The exact number of units of each item that arrived.
- Purchase Cost: The cost per unit of each item from the supplier. This is critical for accurately calculating the Cost of Goods Sold (COGS).
- Vendor/Supplier: The name of the vendor from whom the items were received.
- Date of Receipt: The date the inventory was received, which is important for historical tracking and financial reporting.
- Packing Slip/PO Reference: The system may also record the packing slip number or the associated purchase order number for a clear paper trail.
Why It Matters
Accurately receiving inventory is a crucial step that has a direct impact on a business’s operational and financial health.
Inventory Accuracy: This process ensures that your system’s inventory levels are accurate in real-time. This prevents the business from selling products it doesn’t have (stockouts) or believing it has more stock than it does.
Cost of Goods Sold (COGS): The purchase cost recorded during receiving is the basis for calculating COGS and, subsequently, your profit margins. Without accurate cost data, your profitability reports will be unreliable.
Smarter Planning: Real-time, accurate inventory data helps a business avoid stockouts and overstocking. It supports better planning and forecasting by providing a clear picture of what is on hand and how quickly items are selling.
Vendor and Purchase Order Management: Receiving inventory helps to close the loop on the purchasing process. It allows a business to confirm that a vendor has fulfilled an order correctly and provides data for reconciling invoices.
The more precise and reliable this step is, the more trustworthy your sales, profit, and financial reports will be. It ties into a range of other POS functions, from purchase orders and vendor management to inventory valuation and tax reporting.
