The gap between what your software says you have and what’s actually on the shelves always has an explanation. Sometimes it’s one big error. More often it’s a collection of small issues that compound over time until you do a physical count and discover the problem.

Start by identifying what kind of variance you’re seeing. Are you consistently short on inventory or do you have more than the computer shows? Shortages often point to theft, unrecorded damage, or missed sales entries. Overages usually indicate receiving errors or returns that were restocked but never entered into the system.

Receiving is where most inventory problems originate. A shipment arrives with 48 units but someone keys in 84. Or a partial shipment gets received as complete because nobody checked the packing slip against the actual boxes. Every error at receiving cascades through your entire system until you do a count months later and can’t explain the numbers.

Data entry mistakes during sales create mismatches too. Wrong item scanned, quantity entered incorrectly, or a sale that happened but never got recorded. If you’re using a point of sale system, check whether items are being scanned correctly or if employees are using manual overrides that introduce errors.

Timing matters more than people realize. If you count inventory on Tuesday morning but your software last updated Monday night, any sales or receipts in between create an apparent discrepancy. Make sure you’re comparing the same moment in time by freezing your software numbers exactly when you do your physical count.

Damaged and spoiled goods are another common culprit. Product gets broken, expires, or becomes unsellable. If nobody records that shrinkage when it happens, your computer thinks you still have inventory that went in the dumpster weeks ago. Build a habit of recording every write-off immediately rather than trying to account for it later.

Theft happens and shows up as unexplained shrinkage. This is uncomfortable to acknowledge but you can’t fix what you won’t look at. Consistent shortages on high-value or easily pocketed items warrant closer attention to procedures and access controls.

Cycle counts prevent small problems from becoming big ones. Instead of doing one massive annual count, count a portion of your inventory regularly throughout the year. High-value items get counted more frequently. Discrepancies get investigated while the trail is fresh and people still remember what happened.

Your software configuration matters too. If products have duplicate SKUs, or if assemblies and components aren’t set up correctly, the math won’t work no matter how careful your procedures are. A Findlay bookkeeper who understands inventory systems can help identify whether your problem is procedural or something built into your setup.

Some variance is normal and acceptable. Expecting perfect alignment between physical and computer inventory isn’t realistic for most businesses. What matters is keeping variance within a tolerable percentage and understanding where it comes from. If you’re consistently off by more than a few percent and can’t explain why, you have a process problem worth fixing before it costs you real money.