Box, piece, kilogram: keeping stock records in different units

Say tea arrives at the shop in boxes of 24 and is sold to the customer by the piece. Sugar is bought in 50-kilogram sacks and leaves by the kilogram or in one-kilogram bags. The table says "balance: 12", but 12 of what: boxes, pieces or kilograms? This is exactly where a balance can be wrong by a factor of 24 in an instant. It is one of the cheapest but commonest errors in stock records: confusion over the unit of measure.

Three kinds of unit

Every item can have at least three units:

• the receiving unit: how the goods arrive (box, sack, pack);
• the record unit: what the balance in the table is kept in;
• the selling unit: how the customer takes it (piece, kilogram, litre).

The main rule is to keep the balance in the smallest unit you sell. Tea in pieces, sugar in kilograms. At receiving you convert the box or sack into that unit, and at the sale you convert nothing. Then the figure "12" in the table always has one meaning.

A customer who takes a whole box is sometimes given a lower price. Even then the balance is kept in pieces: the sales row says "1 box = 24 pcs", while the price difference sits on a separate price line. Then both the record and the discount are clearly visible.

A coefficient column

Do not trust memory for the conversion; write it into the table. Add two columns to your item list: "Receiving unit" and "How many in it". Examples:

• tea: box, 24 pcs;
• sugar: sack, 50 kg;
• soap: pack, 6 pcs.

Now receipts are calculated exactly. An illustrative example: 5 boxes of tea arrive, so 5 × 24 = 120 pieces are booked in. If a box costs 48,000 so'm, the cost of a piece is 48,000 / 24 = 2,000 so'm. In this way both cost and balance stand in one unit, and profit is easier to calculate.

If you buy one item from two suppliers, the packing may differ: boxes of 24 from one, 20 from the other. In that case record the coefficient separately by batch or supplier.

Weighed goods

For goods sold by weight a second question arises: kilogram or gram? Choose one and always use it. For most people the kilogram is convenient: 250 grams is written as 0.25 kg. Mixed entries, "kg" on one row and "g" on another, will soon confuse you.

Once a sack is opened there is natural loss too: spilling, dust, scale error. An illustrative example: you pack a 50 kg sack of sugar into one-kilogram bags and get 49.6 kg. Record the amount actually obtained and mark the 0.4 kg difference as "natural loss". The difference is neither goods nor something stolen, just a fact that must be accounted for.

It affects cost as well. An illustrative example: a sack costs 380,000 so'm. Counted as 50 kg, a kilogram costs 7,600 so'm. If you really got 49.6 kg, the true cost is 380,000 / 49.6 = about 7,661 so'm. The difference is small but becomes noticeable over hundreds of kilograms.

Do not forget the unit in the count

On the count sheet every row should show its unit. A number alone means nothing. Count opened and unopened boxes separately:

1. write the number of full boxes;
2. count separately the pieces taken out of boxes;
3. total = boxes × coefficient + pieces.

An illustrative example: 3 full boxes and 7 loose pieces give 3 × 24 + 7 = 79 pieces. If an employee writes just "10", nobody will later know whether it is 10 boxes or 10 pieces.

Common mistakes

The four commonest mistakes:

• receipts are entered in boxes, sales in pieces, and the balance goes negative;
• the price is written per box but multiplied by pieces;
• one item sits on two rows under two names in two units;
• the coefficient has changed (the supplier now sends boxes of 20 instead of 24) but was not entered in the table.

Conclusion

A unit of measure seems a small thing, yet it can spoil the balance, the cost and the profit. Records in the smallest unit, a coefficient column and the unit on the count sheet prevent most errors. If the units in your table are already mixed up and you no longer trust the balances, the AniqHisob team can run a stock count, determine the balances afresh and help put your records in order.