A stocktake means physically counting everything in stock on a given date, then comparing it with what your records say. On paper, nothing could be simpler. In practice, a poorly prepared count ties up a whole team, stops shipments and produces variances nobody can explain. Well prepared, it follows a precise method — plan, prepare, freeze, count, check, adjust, close — and gives a reliable picture of your stock, useful to your accountant and to your teams alike. This guide walks through each step, with a timeline, a breakdown of roles, how to calculate variances and duration, and the mistakes to avoid.
In short
A physical inventory count takes place in 7 steps: (1) plan the date, scope and teams; (2) prepare the site (tidy, label, set aside what must not be counted); (3) stop stock movements and freeze the book stock; (4) count zone by zone, without seeing the expected quantities; (5) compare with the book stock and recount significant variances; (6) approve and adjust the stock; (7) value the stock, file the records and analyze the causes of variances. In the UK, companies dealing in goods must keep statements of stock held at each financial year-end; in France, the law requires an inventory at least once every twelve months. With a mobile counting app, several teams count at the same time and variances are calculated automatically.
What is a stocktake?
A stocktake (or physical inventory count) is the item-by-item count of the quantities actually present in a store, warehouse or stockroom on a given date. Each counted quantity is then valued — multiplied by a unit cost — to establish the value of the stock that will appear on the balance sheet.
It should not be confused with the perpetual inventory, which is the book stock kept up to date, movement by movement, by software: that book stock is precisely what the physical count checks. Nor with a stock audit, which goes beyond counting: it examines how reliable your processes are, what causes variances and whether you comply with the rules. For the audit process itself, see our guide How does a stock audit work?.
| Concept | What it is | What it is for |
|---|---|---|
| Physical count (stocktake) | Actual count of the quantities present on a given date | Establish the real stock and its value; check the book stock |
| Perpetual inventory | Book stock updated with every receipt and every issue | Know your stock at any time, without counting |
| Stock audit | Review of processes, variances and their causes | Make stock management reliable over time |
Is a stocktake mandatory?
In most countries, yes: a business that holds stock must be able to justify its quantity and value in the annual accounts, which in practice means counting it at least once a year. The exact rules depend on the country. The main references:
- United Kingdom. Under the Companies Act 2006 (section 386), a company whose business involves dealing in goods must keep statements of stock held at the end of each financial year, together with the statements of stocktakings they are prepared from.
- How long must records be kept? In the UK, accounting records must be kept for three years by a private company and six years by a public company (section 388). Other countries set longer periods, such as ten years in France and Germany.
- France and Germany. The French Commercial Code (article L123-12) requires every trader to check the existence and value of the business's assets by an inventory at least once every twelve months; the German Commercial Code (HGB, section 240) requires an inventory at the end of each financial year.
- At what value? Under IFRS (IAS 2), inventories are measured at the lower of cost and net realizable value, using the FIFO or weighted average cost formula; LIFO is not permitted. Damaged, expired or unsaleable items found during the count may therefore have to be written down.
- What about the auditor? When inventory is material to the financial statements, the auditor normally attends the physical count to check how it is carried out (ISA 501, International Standard on Auditing).
These are general pointers, not legal advice: check the rules that apply in your country, and to your type of organization, with your accountant.
Sources: Companies Act 2006, s. 386 · s. 388 · French Commercial Code, art. L123-12 · HGB, s. 240 · IAS 2 Inventories. Texts consulted on 29 September 2026.
The different types of stock count
There are several ways to organize counts, and they can be combined: many businesses keep a perpetual inventory in their software, count part of their stock throughout the year and, if needed, run a full count at year-end.
| Type | Principle | When to use it | Watch out for |
|---|---|---|---|
| Annual (year-end) stocktake | All stock is counted on the same date, usually the financial year-end | Small stocks, or a book stock not reliable enough to do otherwise | Ties up the whole team; operations stop during the count |
| Cycle counting | Stock is counted in parts — a zone, a product family, a class of items — at regular intervals | Stock managed in software, operations that cannot stop | Every item must be counted at least once per financial year; requires discipline |
| Perpetual inventory | The software updates the book stock with every receipt and every issue | As soon as stock is managed in software | It is not a count: it must be checked by physical counts |
| Spot (partial) count | Targeted count of one zone or one product family | After a theft or incident, before a move, when the person in charge changes, on high-value items | Stop movements in the counted zone until the adjustment is made |
To organize cycle counting, the most common method is ABC classification: A items — few in number but accounting for most of the value — are counted often, for example monthly; B items every quarter; C items once or twice a year.
The 7 steps of a stocktake
Whether it covers all your stock or a single zone, a stocktake always follows the same sequence.
Plan the count
Set the date (financial year-end or a quiet period) and duration, the scope (all stock, one site, one zone) and the count manager, who coordinates and settles doubtful cases. Estimate the number of lines to count to size the teams, book them, and inform your accountant — and your auditor, if you have one. Also warn customers, suppliers and carriers: no receipt or shipment should happen during the count.
💡 Run a test count on one zone a few days before: you will know how long a line takes, and therefore how many counters you need.
Prepare the site
Tidy up: identical items grouped together, locations and products labeled, opened cartons identified. List what must not be counted — goods owned by third parties (consignment stock, customer stock held on their behalf), products already sold and awaiting collection — and set it aside. Conversely, list what must be counted even though it is not on site: stock held by a subcontractor, on consignment at a customer's, goods in transit that you already own. Finally, set aside quarantined, damaged or expired products: they are counted separately.
💡 A warehouse divided into numbered zones and locations prevents both missed items and double counts. Our warehouse location plan generator helps you build one.
Stop stock movements and freeze the book stock
The day before, record everything pending: receipts, issues, returns, transfers. When the count starts, note the number of the last goods receipt and the last delivery note recorded: this is the cut-off, which lets your accountant allocate each purchase and each sale to the right financial year. Goods received after the cut-off are stored separately and not counted. Then block movements in the zones being counted until the variances are approved: an item that moves during the count creates an artificial variance that nobody can explain afterwards.
💡 Post the cut-off (last document numbers, date and time) at the warehouse entrance: everyone knows what counts and what does not.
Count, zone by zone
Each team gets one zone, and one only, which it counts in a fixed order: left to right, top to bottom, location after location. Count in the stock unit — the piece, the liter, the kilo, not the carton if stock is kept by the piece —, open partly used cartons, and note damaged or expired items separately. Ideally, counters do not see the expected quantity: this is the blind count, which stops people from “confirming” a figure instead of counting. A finished location is marked so that nobody goes back to it.
💡 High-value items are counted twice, by two different people.
Check and recount variances
Counted quantities are compared with the book stock, line by line. Set a tolerance threshold — for example a variance of more than 5% in quantity or more than €50 in value: above it, the line is recounted by another team. Before concluding that something is lost, look for simple causes: wrong unit, item stored in another zone, receipt or issue not recorded, mix-up between two similar items.
💡 Recount while the zone is still frozen: once movements resume, a variance can no longer be verified.
Approve and adjust the stock
The count manager approves the final quantities. The book stock is then corrected: each accepted variance becomes an adjustment movement, dated, attributed to its author and, ideally, justified (breakage, expiry, recording error, unexplained shrinkage). Never correct “silently” by overwriting one quantity with another: without a trace, you cannot explain the variance next year, nor justify it in an audit or tax inspection.
💡 Reopen movements zone by zone as soon as each one is adjusted, rather than waiting for the whole count to finish.
Value, file and analyze
Approved quantities are valued — at weighted average cost or using FIFO — to give the value of the closing stock; obsolete, damaged or expired items are flagged for a possible write-down. Write a count report: date, scope, teams, cut-off, variances found and corrections made. Send the valued stock list to your accountant, file count sheets and exports, then analyze the causes of variances to decide what to change.
💡 Track stock accuracy from one count to the next: it is the best indicator of the quality of your stock management.
Timeline: the stocktake from D-30 to D+7
A successful stocktake is largely won before count day. Here is a typical timeline, to adapt to the size of your stock:
| When | Actions | Who |
|---|---|---|
| D-30 | Set the date, scope and count manager; inform your accountant and auditor; book the teams | Management, count manager |
| D-15 | Divide the warehouse into zones; check labels and locations; prepare the equipment (terminals, chargers, network coverage in the zones); train the counters; run a test count | Count manager, logistics |
| D-7 | Warn customers, suppliers and carriers; process returns and disputes; tidy up and set aside what must not be counted | Purchasing, sales, warehouse staff |
| D-1 | Record all pending receipts and issues; stop movements; charge the devices and open the count on each one; brief the teams | Warehouse staff, count manager |
| Count day, morning | Record the cut-off (last receipt and delivery documents); start counting zone by zone; monitor progress | All teams |
| Count day, afternoon | Analyze variances; recount above the tolerance threshold; approve finished zones | Checkers, count manager |
| D+1 to D+3 | Adjust the stock; value it; reopen movements | Count manager, accounting |
| D+7 | Count report, handover to the accountant, root-cause analysis, action plan | Count manager, management |
Who does what during a stocktake?
Clear roles prevent double counts, forgotten zones and unchecked corrections:
| Role | Responsibilities |
|---|---|
| Count manager | Plans, divides the zones, trains the teams, monitors progress, settles doubtful cases and approves variances. |
| Counters | Count their zone in the planned order, in the stock unit, and report anomalies (breakage, expiry, unlabeled item). |
| Checkers | Recount lines whose variance exceeds the threshold, plus a few lines at random; they never check a zone they counted. |
| Accounting, external accountant | Sets the cut-off, values the stock, records the closing entries and any write-downs. |
| Auditor (if any) | Attends the count when inventory is material, checks the procedures and may perform test counts. |
| Management | Decides on the date and resources, approves the count report and the action plan. |
Counting best practices
A few simple rules make the difference between a reliable count and one you have to redo:
- Count blind. The count sheet or screen does not show the expected quantity. It is slower but far more reliable: otherwise people check a figure instead of counting.
- Work in pairs. One counts, the other writes down or scans; swap roles at each zone.
- One zone, one team. Never two teams in the same aisle: it is the leading cause of double counting.
- Sealed cartons, opened cartons. A sealed, labeled carton counts for its stated contents — open a few at random to check; an opened carton is opened and counted unit by unit.
- Count by weight. For small parts (screws, components), weigh the batch and divide by the unit weight, measured on a sample of 10 or 20 parts.
- Mark what is done. A counted location gets a label or sticker; an empty location is recorded too (“zero counted”), to prove it was checked.
- Set anomalies aside. Damaged, expired or unlabeled items are counted and recorded separately, then dealt with after the count.
Inventory variances: calculate, understand, correct
An inventory variance is the difference between what was counted and what the book stock says. Three formulas are enough to measure it:
Quantity variance = counted quantity − book quantity
Value variance = quantity variance × unit cost (weighted average or FIFO)
Stock accuracy rate = items without variance ÷ items counted × 100
Example. Out of 1,200 items counted, 1,116 match: accuracy is 1,116 ÷ 1,200 = 93%. Among the 84 items with a variance, an M6 screw expected at 1,200 pieces only counts 1,150: the variance is −50 pieces, or −€4 at €0.08 per piece. Always analyze variances in quantity and in value: 50 missing screws matter less than one missing motor.
Set yourself an accuracy target — for example 95% — and track it from one count to the next: its progress measures how effective your corrections are.
The most frequent causes, and how to recognize them:
| Cause | What you see | How to prevent it |
|---|---|---|
| Receipt not recorded | Surplus on recently delivered items | Record every receipt the same day, preferably by scanning |
| Issue not recorded | Shortage on items used or shipped | No issue without a document or scan; limit self-service |
| Wrong unit | Variance by a round multiple (×6, ×10, ×12) | Show the stock unit on count sheets and on screen; train counters |
| Item stored elsewhere | Shortage in one zone, surplus of the same item in another | Label locations; match variances across zones before correcting |
| Item mix-up | Shortage on one item, surplus on a similar one (size, color, variant) | Scan the barcode instead of reading a description |
| Unreported breakage or expiry | Shortage, damaged items found in the scrap bin | Record every breakage and expiry as a justified issue |
| Double count or missed zone | Unexplained surplus, or a shortage across a whole zone | One zone per team, locations marked, progress monitored |
| Theft or unexplained shrinkage | Repeated shortages on the same items, often small and expensive | Control access to stock; count these items more often |
Golden rule: only correct a variance after looking for its cause. A variance corrected without an explanation comes back at the next count.
How long does a stocktake take?
Duration depends on three factors: the number of lines to count (one line = one item in one location), the average time per line and the number of counters. One formula is enough to estimate it:
Counting time ≈ number of lines × time per line ÷ number of counters, plus preparation and recounts
Example for 2,000 lines and 4 counters — assumptions to replace with your own timings:
| Method | Time per line (assumption) | Counting | Re-keying |
|---|---|---|---|
| Paper count sheets | 45 s: find the line, count, write | 2,000 × 45 s ÷ 4 ≈ 6 h 15 min | 2,000 × 10 s ≈ 5 h 30 min for one person |
| Scanning with a mobile app | 15 s: scan, count, confirm | 2,000 × 15 s ÷ 4 ≈ 2 h 05 min | None: counts go straight into the software |
Add preparation — often one to two days spread over the previous weeks — and recounts. Time 20 lines in a test zone: it is the surest way to set your schedule.
The mistakes that distort a stocktake
Eight mistakes come up in most failed stock counts:
- Counting stock that is moving. Without a cut-off and without stopping movements, every receipt or shipment during the count creates an artificial variance.
- Counting other people's stock, forgetting your own. Consignment or third-party goods counted by mistake; stock at a subcontractor's or in transit forgotten.
- Getting the unit wrong. A carton of 12 counted as one piece, or the reverse: the variance is huge although nothing is missing.
- Showing counters the expected quantity. The counter confirms the figure instead of counting: variances stay hidden.
- Letting two teams work the same zone. Some locations get counted twice, others never.
- Correcting without looking for the cause. The variance disappears from the stock, not from the process: it will come back.
- Re-keying paper sheets. Every re-keying adds reading and typing errors, and hours of work.
- Filing nothing. Without count sheets, a count report or a history of corrections, you cannot justify your stock in an audit or inspection.
Stocktake checklist
To print or keep at hand, step by step:
Before
- Date, scope and count manager set
- Accountant (and auditor) informed
- Warehouse divided into zones, locations labeled
- Third-party stock set aside, off-site stock listed
- Pending receipts and issues recorded
- Devices charged, count opened on each one, teams trained
During
- Cut-off recorded (last receipt and delivery documents)
- Movements stopped in the zones being counted
- One zone per team, in a fixed order
- Counted locations marked, empty locations recorded
- Anomalies (breakage, expiry, no label) recorded separately
After
- Variances above the threshold recounted
- Causes investigated before any correction
- Stock adjusted through traceable movements
- Stock valued, count report written and sent to the accountant
- Records filed, action plan agreed
Paper, spreadsheet, handheld scanner or mobile app: which tool to choose?
The right tool depends on the number of items, the size of the team and how much traceability you need:
| Tool | Advantages | Limitations |
|---|---|---|
| Paper count sheets | No equipment, immediate set-up | Slow, re-keying required, reading errors, no live monitoring |
| Spreadsheet | Familiar tool, variances can be calculated | One file for everyone, versions going around, re-keying from the floor, no traceability |
| Handheld scanner connected to a computer | Fast, reliable barcode reading | Mobility limited by the cable or range; you still need software to process the data |
| Mobile counting app built into the stock software | Several counters at once, scanning on smartphone, tablet or PDA, automatic variances, no re-keying | Assumes your stock is managed in the software |
This last approach is what you get with the inventory built into GSE-Web, described below.
The inventory built into GSE-Web: count as a team on mobile, tablet and PDA
In GSE-Web, the stock count is not a separate file: it takes place in the software that already manages your stock. Counts go straight into the inventory, with no export or re-keying, and every correction is recorded in the stock history.
Everyone counts at the same time
Each counter scans on their own device; all counts add up in the same inventory, each with its author and time.
Smartphone, tablet or PDA
Scan with the camera of a smartphone or tablet, even from the web browser, or use “Gun mode” with PDA terminals and USB or Bluetooth scanners set to keyboard emulation.
Live supervision
A monitoring screen, refreshed every 30 seconds, shows scans per person and per location and who is actively counting. It flags unknown codes and products scanned by two different counters, to spot a double count.
A “count only” permission
Extra staff or temporary workers can scan and submit their counts without being able to create, edit, adjust or close an inventory. The server enforces it, not just the screen.
Variances calculated automatically
Each line is classified: correct, to adjust, not found (in stock but not counted) or unknown (code not in the catalog). Variances can be filtered to get straight to what matters.
Traceable corrections
“Adjust to actual” creates dated, attributed correction movements in a history that is never rewritten. “Adjust to system” keeps the system quantity when it was the count that was wrong.
Cycle counting by zone
Give each zone a counting frequency: GSE-Web shows which zones are up to date, due soon or overdue, and starts the count in one tap.
Even without a network
On smartphones and tablets, if the network drops at the back of the warehouse, scans stay on the device and are sent as soon as the connection returns. A rejected submission is passed on to the team instead of being lost.
Excel exports
Count sheet per location for a zone without a device, summary of surpluses, shortages, unscanned and unknown items with their value at the price excluding VAT, and an export of the analysis for your accountant.
A stocktake in GSE-Web, in 5 steps
- The manager creates the inventory, for a whole warehouse or a single zone.
- Each counter opens it on their device, picks the location they are counting and scans.
- The manager follows progress on the supervision screen.
- They switch the inventory to “In analysis”: variances are listed, ready to be checked.
- They adjust the stock, close the inventory and export the summary.
Inventory is included from the PRO plan (€199 excl. VAT per year, 1 user). To count as a team, each counter has their own account: TEAM plan (€500 excl. VAT per year, 5 users included, up to 10) or ENTERPRISE (up to 50 users). See pricing
Frequently asked questions about stocktakes
How does a year-end stocktake work?
It is prepared over about a month: set the date, usually the financial year-end, divide the warehouse into zones, train the teams, record all pending movements. On count day, record the cut-off (last receipt and delivery documents), stop movements and have each team count its zone. Significant variances are recounted, then the stock is adjusted, valued and sent to the accountant.
What is the difference between a stocktake and a stock audit?
A stocktake counts and values stock on a given date. A stock audit goes further: it examines the reliability of processes, the causes of variances and compliance. The stocktake is one of the steps of an audit: see our guide How does a stock audit work?
Is a physical stock count required every year?
In most countries, yes. In the UK, the Companies Act 2006 requires companies dealing in goods to keep statements of stock held at each financial year-end, with the stocktaking records behind them; in France, the Commercial Code requires an inventory at least once every twelve months. A business with a reliable perpetual inventory can usually spread its counts over the year, provided every item is counted at least once per financial year — check with your accountant or auditor.
Can you keep selling or shipping during a stocktake?
It is not recommended in zones being counted: an item that comes in or goes out during the count distorts the variance. The safest approach is to stop movements in the counted zone until the adjustment is made. Cycle counting lets you block one zone at a time while the rest of the warehouse keeps working.
What is a blind count?
It is a count where the person counting does not see the expected quantity. They record what they actually see, instead of checking a figure in front of them. It is slower but far more reliable: it is the best protection against variances that stay hidden.
What is cycle counting?
It is a stocktake spread over the year: part of the stock — a zone, a product family, high-value items — is counted at regular intervals, so that every item is counted at least once per financial year. It avoids stopping all operations once a year and catches variances earlier. It requires a book stock kept up to date in software.
How long does a stocktake take?
Count on: number of lines × average time per line ÷ number of counters, plus preparation and recounts. For example, 2,000 lines at 45 seconds per line on paper sheets, with 4 counters, take just over 6 hours of counting, not including re-keying; by scanning, at 15 seconds per line, just over 2 hours. Time a test zone to refine the estimate.
How can several people count without counting the same items twice?
Assign one zone to each team, have it counted in a fixed order and mark each finished location. A shared counting app helps too: in GSE-Web, every scan is attributed to its author, and the supervision screen flags any product scanned by two different counters.
Can you do a stocktake with a smartphone or a PDA?
Yes. A counting app reads barcodes with the camera of a smartphone or tablet, or with the built-in scanner of a PDA terminal. GSE-Web supports both: the camera, including from the web browser, and “Gun mode” for PDAs and scanners set to keyboard emulation. On smartphones and tablets, counting continues even if the network drops.
What should you do about an inventory variance?
Recount first, with another person. Then look for simple causes: wrong unit, item stored elsewhere, receipt or issue not recorded, mix-up between two items. Only then adjust the stock with a dated, justified movement, noting the cause: that is what lets you fix the process, not just the figure.
Switch to team stock counts with GSE-Web
Simultaneous counting on smartphone, tablet and PDA, live supervision, automatic variances and traceable corrections: the stocktake takes place in the software that manages your stock.