Writing off unsellable goods: the act and simple rules

Picture this: in the corner of the storeroom stands a box of broken glass jars. In the table they still appear as "12 pieces", but nobody will sell them and nobody has written them off. At every count the same 12 pieces come out as a "shortage", and the same question comes back each month. The balance on paper differs from the real one because the loss has not been acknowledged. A write-off is an honest, orderly way of acknowledging it.

What gets written off

There are several kinds of goods that can no longer be sold:

• broken, crushed or torn goods;
• damp, spoiled, infested or melted goods;
• goods past their expiry date;
• goods with a factory defect that the supplier will not take back.

There is an important distinction: a write-off covers a loss whose cause is known and evidenced. A shortage of unknown cause is not written off; it is investigated separately as a shortage. If you mix the two, the real problem stays hidden. Unfit food and medicines must not be sold, and for the rules on destroying them ask your accountant or the relevant authority about the requirements currently in force.

Before you write off

Not everything damaged is rubbish. Goods with crushed packaging but sound, usable contents can be sold at a discount. Remember two things here: the quality must truly be unaffected, and the customer should know the reason for the discount. Set the discounted price separately and keep it apart from the normal price in your sales record, so that profit is worked out correctly. If the goods cannot be sold, the write-off route is the one to take.

A simple act

You do not need a big document; one page is enough. It should contain:

1. the date;
2. the item name and quantity;
3. the cost of one unit and the total;
4. the reason: broken, expired, damp and so on;
5. who found it;
6. the owner's approval and signature;
7. a note that a photo was taken.

An illustrative example: 12 glass jars at 15,000 so'm each, 180,000 so'm in total. Reason: fell off the shelf and broke, found by the salesperson. The owner signed and a photo was taken. A short act like this still answers questions a year later.

A six-step routine

1. Take the goods off sale at once and put them into a separate "unfit" box, otherwise they may be sold by mistake.
2. Photograph them: the goods as a whole and the defect up close.
3. Write the act.
4. The owner or a responsible person confirms it.
5. In the table, record an issue of the "write-off" type. Do not mix it with a sale: a sale brings in revenue, while here there is only a loss.
6. Destroy the goods or return them to the supplier.

Decide in advance who does what: a salesperson or storekeeper finds the defect and the owner confirms it. If the same person both finds and approves, the control disappears.

Pay particular attention to the last step. If the defect came from the factory, the supplier may replace the goods or refund the money. But such claims are usually accepted only within a limited period, so send a photo of the defect as soon as you find it.

Look at losses separately from profit

At month end, add up the total written off. An illustrative example: in one month 180,000, 90,000 and 240,000 so'm, 510,000 so'm in all. Count it at cost, not at selling price: what you lost is the money you spent. That amount comes straight off your profit. Compare it with monthly takings and set the first, second and third months side by side. If the sum is growing, look for the cause: are you buying too much, is storage poor, are staff handling goods carelessly, is anyone watching expiry dates?

If you write the reason next to each act, after a few months the most frequent one shows itself. For example, if half the broken goods fell from a single shelf, the problem is not the goods but that shelf.

Conclusion

A write-off does not remove the loss, but it makes it visible and explained. A short act, a photo, the owner's signature and a monthly total bring the balance in the table closer to reality, and the same "mysterious" gaps stop surfacing at every count. If unfit goods have sat in your shop's table for years, the AniqHisob team can run a stock count, establish the real balance and help restore your records.