An accounting and inventory management system holds a wealth data that can be analyzed and used to improve your business. Learning to use that data properly can make a drastic difference in profits.
(PRWEB) March 18, 2015
Businesses that manage inventory face a whole new level of complexity. Keeping enough items in stock and selling the most profitable items are crucial to the operation of an inventory-based business. Use these tips by Red Wing Software to increase profits.
“An accounting and inventory management system holds a wealth data that can be analyzed and used to improve your business. Learning to use that data properly can make a drastic difference in profits.” Ken Hilton, Red Wing Software President.
Use ABC Analysis report.
An ABC Analysis report is based on the 80/20 rule. When applied to product inventory, it says that 80% of sales come from 20% of inventory items. Knowing which 20% of items are garnering the most sales can help provide insight that leads to increased profits. Within an ABC analysis report, items are analyzed and ranked, according to percentage of sales. Items can be ranked based on cost of goods sold (COGS) or by the number of times that item has been sold. Ranking is done in descending order, using the following scale A=80%, B=Next 15%, C=Next 4%, D=Next 1% and X representing no sales. Drill down can be done ever further by narrowing the report to a specific product line to analyze only that set of products. By using this report, managers get a clear vision of top performing items, which can help for developing marketing plans, sales forecast, purchasing plans and more.
Check Gross Profit Margin.
Knowing the profitability of each item you sell is a crucial step in growing profits. Use your accounting system’s reporting consistently to determine which of your items are profitable and which are not, so you can take action accordingly. When you know which products are your most profitable, you can focus your marketing efforts on those items to better increase your bottom line.
Keep the right number of items in stock.
Having the right number of items in stock not only promotes better organization and a streamlined workload, and also makes for happier customers. An accounting system with purchase order function should allow the ability to set up a minimum and maximum for each item, so an alert will be sent when reordering is necessary. A “Suggested Orders” report within the purchase order function can also help by evaluating stock quantities and suggesting which items may need to be ordered. The Suggested Orders report looks at past sales, stock levels, and other parameters you set, to come up with a list of suggested purchase orders.
Whatever accounting software is used, businesses can take advantage of reports and tools in the system to help better manage inventory.
Red Wing Software, Inc., along with its nationwide network of business partners, offers industry-leading service, as well as training, on-site installation and implementation of the software. Their vision is “Creating the best management software experience”.
Red Wing Software, Inc. develops, integrates and supports the accounting and financial management needs of small- to mid-sized businesses, YMCAs, agribusinesses, Non profits, and municipals across North America. For more information on Red Wing Software products, including TurningPoint Accounting, CenterPoint Accounting, CenterPoint Accounting for Agriculture, CenterPoint Fund Accounting, CenterPoint Payroll, call 1-800-732-9464 or visit http://www.redwingsoftware.com.