Guide Categories
Inventory Write-offs
Remove damaged, obsolete, or lost inventory items from your stock records.
Overview
Inventory write-offs document the removal of inventory items from your stock records due to damage, obsolescence, theft, or other losses. These entries ensure your inventory records remain accurate and your financial statements reflect the true value of your stock.
Note
Inventory write-offs reduce both your inventory quantity and value, and impact your cost of goods sold or expense accounts.
Creating an Inventory Write-off
To record an inventory write-off:
- Navigate to the Inventory Write-offs tab
- Click New Inventory Write-off
- Select the items to write off
- Enter the quantities being written off
- Choose the reason for the write-off
- Enter the write-off date and reference
- Save the write-off record
Common Write-off Reasons
Damaged Goods
Items damaged during handling, storage, or transportation
Obsolete Stock
Items that are no longer sellable due to age or market changes
Theft or Loss
Items that have been stolen or cannot be located
Expired Products
Items past their expiration date or shelf life
Key Information Fields
| Field | Description |
|---|---|
| Date | Date of the write-off |
| Reference | Write-off reference number |
| Items | Items and quantities being written off |
| Reason | Reason for the write-off |
| Value | Total value of items written off |
| Account | Expense account for the write-off |
Financial Impact
When you record inventory write-offs:
- Inventory quantities and values are reduced
- Write-off amounts are charged to expense accounts
- Cost of goods sold may be affected
- Financial statements reflect the true inventory value
- Tax implications may apply depending on the reason
Best Practices
- Document write-offs promptly when losses are identified
- Maintain supporting documentation for audit purposes
- Implement proper approval processes for write-offs
- Regular review inventory for obsolete or damaged items
- Use appropriate expense accounts for different write-off types
- Investigate patterns of write-offs to identify systemic issues
- Consider insurance claims for eligible losses
Warning
Large or frequent write-offs may indicate inventory management issues that need attention, such as poor storage conditions or inadequate security measures.