The new year has begun, and many RV businesses have completed a physical count of their parts and accessories inventories. This process often involves adjusting computer values and accounting values to ensure accuracy. In this two-part series, we will explore methods for maintaining the accuracy of and equivalency of parts and accessories inventories in RV businesses. Effective inventory management is essential for communicating with department managers, particularly those from the accounting department. By sharing this article with other department managers, RV business owners can ensure that all stakeholders are on the same page regarding inventory values.
Understanding the ABCs of inventory management is vital for effective communication among department managers. The three values of parts and accessories inventories are A (accounting value), B (computer value), and C (equivalency). Maintaining accurate and equivalent sets of these values requires collaboration between managers to discuss how to achieve this accuracy. One crucial aspect to be decided upon is determining which goods qualify as inventory and which qualify as direct expenses.
Purchasing various types of goods, RV businesses must ensure that accounting and parts-accessories managers agree on the classification of goods. If the parts-accessories manager receives an item to an inventory category in the DMS but the accounting manager posts it to an expense account, the B and C values will not be equivalent. This highlights the importance of clear communication and classification of goods.
Accruing supplies used to maintain or repair RVs is often straightforward, but deciding how to classify supplies requires discussion. Toilet tissue, for example, can be considered a direct expense item or controlled in the DMS database as an inventory item. The decision depends on the management team's approach and the benefits of each option.
If toilet tissue is designated as a direct expense, it should be accrued to the appropriate G/L expense account(s) upon receipt of each shipment. This simplifies reordering and ensures that expenses are accurately recorded. In contrast, controlling toilet tissue as an inventory item allows for tracking usage and suggests reordering based on stock levels.
Controlling common supplies like toilet tissue in the DMS database can help identify unusual demand and potential internal theft. By tracking usage rates, RV businesses can optimize their operations and reduce expenses. This approach has been successful for clients who have seen a decrease in operating expenses after implementing this method.
Developing perpetual inventory checks can aid in maintaining accuracy by aligning actual and computer values of inventories. Two examples of such checks are the price and availability check, which should be implemented for goods with an average on-hand quantity of less than five. This ensures that parts associates verify inventory levels and report discrepancies to the parts-accessory manager.
Another cycle count method is the stock order cycle count, where a suggested stock order is generated and verified to ensure accuracy. By confirming that reported and actual on-hand quantities are equal, RV businesses can maintain accurate counts for frequently requested items before ordering.
Investigating discrepancies between actual and computer values is crucial when performing cycle counts. If discrepancies are verified, adjustments must be made, and these adjustments should be reported to the accounting manager to ensure accuracy in the G/L inventory account.
Proper inventory management is crucial for maintaining accurate records and ensuring the efficiency of RV businesses.
