What does "inventory reconciliation" involve?

Inventory reconciliation involves ensuring that the physical inventory counts match the recorded inventory in the accounting or inventory management system. This process is critical for maintaining accurate inventory records, which helps in identifying discrepancies, reducing losses, and making informed decisions regarding stock management. When physical counts are conducted, they are compared against what is recorded in the system. If there are differences, this can indicate issues such as theft, damage, miscalculations, or data entry errors that need to be addressed to maintain inventory integrity. By performing regular inventory reconciliations, a business can ensure a true reflection of stock levels, which is essential for effective supply chain management and operational efficiency.