What is Continuous stocktaking?

Stocktaking is simply physical checking or counting of inventory held by the entity and by continuous stocktaking it means inventory counts that are undertaken on regular basis. Continuous stocktaking method is used over periodic stock counts to increase accuracy especially for the goods which are high value or have high turnover i.e. fast moving inventory/goods and entity cannot afford stock outs of such goods as this will be detrimental to profitability or overall benefits of the entity.

Stocktaking in itself is a painstaking job. Larger the amount of inventory more time and man power is needed. Due to same reason entities that following continuous approach have dedicated teams that are provided with preprinted schedules or forms on which counts can be mentioned and the report is sent to the department that controls the amount of inventory usually store manager.

Entity may hold different kinds of inventory but it does not necessarily mean that inventory will count each and every inventory on regular basis. Only the concerned inventory will be subjected to continuous stocktaking and the rest may be checked on period basis i.e. weekly, monthly, quarterly or annually. It just depends on the importance of certain material in given set of circumstances. Also, continuous stocktake might be carried out only in certain months of year or before a certain job etc.

Continuous stocktake approach usually accompanies rather supplements perpetual inventory management (recording) system. With a regular check in place accuracy or inventory records that are managed on run-time basis can also be checked.

Some of the benefits of continuous stocktaking are as follows:

  • identification of losses or wastage
  • Check on inefficiency in production process
  • Continuous monitoring of assets to ensure timely delivery of goods ordered by customers
  • Helps budgeting and forecasting and entity’s adaptability to unforeseen circumstances
  • Increased accuracy of accounting records


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