Shrinkage
In Arabic فاقد المخزون
Shrinkage is the loss of stock between what the books record and what is physically there, caused by theft, damage, expiry, miscounting or recording errors.
In plain words
Every carton that disappears was paid for, so shrinkage is a direct loss of margin. For distributors, with vans and many hands on the goods, it can run quietly for months. It only becomes visible when someone counts the shelf and compares it with the books.
It is measured as the book quantity minus the counted quantity, valued at cost, and often shown as a share of sales or of stock value. The loss is posted to an expense account, so the inventory figure in the ledger matches the shelf again.
The common mistake is writing the difference off without asking why. A one-off loss and a pattern in one van or one bin look the same in a single adjustment. Record where the loss was found, and count the worst places more often.
- Book quantity
- 1,200 units
- Counted
- 1,176 units
- Missing
- 24 units
- Unit cost
- SAR 8.50
- Shrinkage at cost
- SAR 204.00
In Axon Suite
How Axon Suite handles it
In Axon Suite closing an approved count posts a shortfall as a loss and a surplus as a gain, against the inventory account at cost.
Feature
Cycle counts that post the difference
Open a count for a warehouse or a single bin and fill the sheet from what the books hold. Counters enter what they find, a reviewer approves, and the difference posts as one adjustment at cost.
Open: Cycle counts that post the difference