Whether the business is big or small, a lot of things have to be taken care of to run it well. It is rightly said that anyone can start a business, but it needs to be managed properly to attain success. In order to have an efficient business management process, one needs to give equal attention to banking, accounting, expenses, cash flow, and inventory.
Here we will talk about what is inventory and how to manage it easily.
What is Inventory?
Inventory refers to a list of the goods that are available with the businesses for the purpose of sale. It is also known as stock. Inventory is classified as an asset in the balance sheet, as it generates income once the goods are sold. It is also considered as merchandise, which refers to items that are kept by businessmen for sale in the future.
This explains why inventory is important for any business and how managing the same is one of the necessary actions to have a successful run.
Importance of Inventory in Business
Let us try to understand with a simple example about the importance of inventory management.
Gupta ji runs a grocery store and always tries to keep his customers happy. He makes it a point to keep all the items required by the customers in his shop. However, at times he forgets to order some items, due to which his customers have to return empty-handed. This often has a bad effect on his business. It could’ve been easily avoided if Gupta ji had paid attention to the inventory of his shop and ordered the remaining items.
This is the reason why inventory is important for everyone from small businesses to large businesses. If it is not managed properly, then it may have a negative impact on the business, and the trust of customers is also compromised.
Purchase orders are created to manage inventory. Let us now know what a purchase order is and why it is useful for inventory.
What is a Purchase Order?
A list of items to be ordered from a vendor is called a purchase order. Suppose Gupta ji makes a list to order shortage items like pulses, oil, sugar, salt, soap in a grocery store mentioning the quantity required. This particular list of Gupta ji is what we call a purchase order. Now Gupta ji can place the order to the vendor with the help of this list.
Use of Purchase Order in Inventory
A purchase order is an essential part of inventory management. If one wants to manage his/her business inventory, then he/she has to create a purchase order for it which will help him/her to manage the inventory properly.
This is a digital age and the majority of work is done digitally. It saves a lot of time and reduces the chances of making a mistake. You can stop creating purchase orders on paper and instead use OpenBook to create the same through your smartphone. You can then send the purchase orders to vendors through WhatsApp, SMS, or email. This will help you manage your inventory super easy and the biggest advantage here is that you can make the payment immediately from OpenBook itself.
Let us also inform you that OpenBook provides a digital business bank account to simplify your business finance management. You can do billing, banking, accounting, and tax — all of it in one place. OpenBook also notifies you about low stock information for you to manage the stocks without facing any shortage.
So don’t wait. Download OpenBook and #BusinessKaroSimple