Physical inventory count checklist for QuickBooks Online

This is the checklist for one complete physical inventory count, ordered by when each item is done. Each line is a check with a sign that it is done, and the reasoning behind each step is in how to do a physical inventory count.

Work through the four phases in order and tick a line only when its sign is true for your whole warehouse. A line you cannot tick is a decision still waiting for someone.

Before count day

These checks settle who counts, where, and what is in scope.

• Set the count date and the cutoff, the moment after which no movement is recorded in the count. It is done when everyone who receives, picks or ships can say the cutoff without looking it up.
• Name the counters, a recounter who is not one of the counters, and a supervisor. It is done when every name is written next to a zone, so no location depends on someone remembering to ask.
• Map the warehouse into locations and group them into zones, for example one aisle and rack, an overflow zone and a returns zone. It is done when you can walk the floor and find no place that holds items but has no location name.
• Label every location, including the ones that hold nothing today. It is done when a counter can read each label from the floor, and an empty location can still be reported as empty.
• Label every item with an identifier the counter can match, such as the item number or a barcode. It is done when you pick an item at random and its label matches your item list.
• Tidy each location so the items in it sit together and can be told apart. It is done when a counter never has to guess whether two stacks are the same item.
• Separate what is not countable, such as returns, vendor holds and damaged goods, and mark where it sits. It is done when each of those items is in a named location, so it is counted on purpose or left out on purpose.
• Decide what happens to receipts and shipments that cross the cutoff, and who writes them down. It is done when you have a place to record every transaction dated on either side of the cutoff, because a receipt entered late or dated wrong is the first thing to check when a difference appears.
• Choose who answers when a counter finds an unlabeled item. It is done when the counters know whom to call and the answer is written on the sheet.

The day before

These checks make count day a matter of counting.

• Prepare one count sheet per location, with the quantity column blank and without the book quantity, so the counter does not see the number to count toward. That is a blind count. It is done when no sheet shows a book number anywhere.
• Number the sheets and keep a list of which counter holds which sheet. It is done when you can tell at the end of the day whether any sheet is missing.
• Check that the location label on each sheet matches the label on the location. It is done when a counter will not have to correct a name on the floor.
• Brief the counters on how to record an empty location and an unlabeled item. It is done when each counter can say what to write for both.
• Brief the counters on when to ask for a recount, in plain terms: a count the counter is unsure of, or a count the supervisor doubts. It is done when no counter is waiting for a number to decide that.
• Confirm that the freeze on movement starts when planned. It is done when the people who move stock have agreed to stop at the cutoff.
• Settle with your accountant the date the adjustment will carry. The QuickBooks Online decisions are in year-end inventory count in QuickBooks Online.
• Check your item list against the books. QuickBooks Online has a Physical Inventory Worksheet report that lists each inventory item on one line with a blank Physical Count line and no location column. The worksheet's columns are covered in the worksheet guide.

InventoryWare Count prints location labels, but it does not print count sheets, so the sheets are yours to prepare.

Count day

These checks keep the count honest while it runs.

• Freeze movement across the whole warehouse at the cutoff, or move stock only through a marked zone that is not counted. It is done when nothing moves in or out of any counted location until every sheet is back, every recount is done and the end walk is complete.
• Hand out the sheets by zone. It is done when each counter holds only the sheets for one zone.
• Have each counter count a location once and return its sheet before starting the next. It is done when no counter carries two open sheets.
• Mark each location as counted when its sheet comes back. It is done when the cover list of locations shows a mark for every returned sheet.
• Write "empty" on the sheet of an empty location, so the location still produces a result. It is done when no returned sheet has a blank quantity without the word.
• Send the recounter to recount any location the first counter or the supervisor is unsure of, without showing either counter the book number. It is done when the two counts are written on separate sheets.
• Have the supervisor sign each location's sheet. It is done when every sheet carries a name and a time.
• Walk the premises at the end and confirm that every location is either counted or marked with the reason it was not. It is done when the cover list and the floor agree.

After the count

These checks come in order, and the adjustment comes last.

• Every item has one counted total, and every difference against the books is on one list. It is done when no item on your list is missing a total, even if the total is zero, and no difference is off the list.
• Every difference has been checked for transactions that were never entered or were entered with the wrong date before anyone calls it a loss, a shortage or shrinkage. It is done when each difference carries either an explanation or the note that none was found.
• The adjustment covers only the differences that remain after that check. It is done when every booked difference has a line on the list that says what was checked.
• Record who counted, when, each difference and what was decided.
• File the sheets, the recount sheets and the list of differences. It is done when someone who was not there could follow the count from the file.
• Review what slowed the day, and write down what to change next time.

QuickBooks Online Plus and Advanced keep one quantity on hand per item, and the inventory adjustment form takes one number per item. So the location counts have to be added into one total per item before you compare anything with the books.

The full reconcile procedure is written once, in the guide to QuickBooks Online inventory limitations. If the numbers still do not agree, why your QuickBooks inventory does not match covers the usual causes.

If your company shows an Inventory counts option under Products and services, Intuit's instructions have you enter a New Quantity for each product in the count and finalize, which creates an Inventory Quantity Adjustment. Intuit's instructions have no step for recording a location, assigning a counter, recounting or approving a variance, as the Inventory Counts article sets them out.

Who signs off what

Each phase ends with one named person saying it is done.

• The supervisor signs off the first two phases: the cutoff is known, every location is labeled, and the sheets are numbered and handed out.
• Each counter signs off the sheets they counted, and the supervisor signs each location after the walk.
• The recounter signs off every recount, and does not see the first count first.
• The controller or the owner signs off the differences list and the decision on each one, and agrees the adjustment date with the accountant.

Where one person holds two of these roles, the person who counted a location should not be the one who signs it off.

Counting with InventoryWare Count

Count records every counted quantity against a location, and an item's counted total is the sum across the locations in the count plan. On the phone, the counter confirms the location label first, and the item step appears only once the label matches. The counter sees no expected quantity for what they count.

A manager can reopen a location for a recount. InventoryWare Count is built for one complete physical inventory count, and posting adjustments to QuickBooks from a partial count is not available.