A cycle count ends with a reconciled difference.

1. Decide what is being counted

Choose the warehouse, location, products and counting window. Define the unit used for each item and identify any lot or serial information required. Avoid a vague instruction such as “count the back room” when the inventory records use several locations.

Prioritise items by value, movement or previous discrepancies. Start with a manageable group rather than scheduling more stock than the team can investigate.

2. Control movements during the count

Record the count cut-off and how receipts, sales and transfers will be treated during the window. If goods continue moving, keep a movement log so the physical observation can be reconciled to the system balance.

Separate damaged, unlabelled or disputed stock so it is investigated consistently. Do not silently include a shipment at both the sending and receiving location.

3. Record the observation before explaining it

Capture the product, location, counted quantity, unit, counter and count time. Record notes on packaging, damaged stock and identification issues. Where practical, avoid presenting the expected balance as the answer the counter is supposed to reach.

Illustrative example: system balance 100, physical count 97. The difference is minus 3; the cause remains unknown until the movement records and physical checks are reviewed.

4. Investigate and approve the difference

Check recent receipts, transfers, sales, units and earlier adjustments. Recount when necessary. Distinguish a data-entry error from missing physical stock and document the reason for the proposed correction.

Tellency cycle counts support completion followed by approval or rejection. An approved count can create a draft inventory adjustment. Approval of the count and posting of the adjustment are distinct stages.

• Inventory management →

5. Confirm the adjustment and close the investigation

Review the proposed adjustment, its status and the expected stock and accounting effects before posting. After the correction, reconcile the quantity and any financial impact using the relevant reports.

Keep a close-out record: count reference, product/location, original balance, physical observation, approved difference, reason, adjustment reference and reviewer. Compare repeated discrepancies to decide whether receiving, labelling or transfer controls need improvement.