Cycle counting instead of one big stock take

How a shop can count a little stock every day instead of closing for a full stock take, and how to investigate and record the differences it finds.

By Achekam · 11 October 2026 · 5 min read · For Retail businesses in South Africa, Nigeria, Kenya

The annual stock take is one of the least loved days in retail. The shop closes early or opens late, staff count until their eyes glaze, and the numbers that come out are trusted by nobody because everyone was tired. Then the differences are written off in one large adjustment and the reasons are never found.

There is another way. Instead of counting everything once, a shop can count a little every day, so that every line is counted several times a year and problems surface while they are still fresh. This approach is called cycle counting. This article explains how it works, how to choose what to count, and how the results reach the stock records and the books.

A little every day, everything over time

AccountingTools defines cycle counting as counting a small amount of inventory each day, with the aim of counting the entire inventory over a period of time. The shop decides the period. A small boutique might cover its whole range every month; a hardware store with thousands of lines might take a quarter.

A practical daily routine for a store:

• before opening, or during a quiet hour, one staff member counts a set of shelves or a category;
• the count is compared with the system's quantity for those lines;
• differences are noted and investigated the same day;
• the next day's count moves on to the next set of shelves.

AccountingTools notes that cycle counting may make periodic physical inventory counts unnecessary and can speed up the period-end close. Whether your auditor will accept cycle counts in place of a year-end count is a question to put to them early, not in the last week of the year.

Count the expensive lines more often

Not every line deserves the same attention. AccountingTools describes ABC analysis cycle counting, in which high-value A items are counted more often than moderate-value B items, and low-value C items least often.

For a typical shop:

It is sensible to put lines with a history of shrinkage into A, whatever their price, because that is where losses tend to show up. The article on measuring the shrinkage rate shows how to find them.

Shelf to sheet, and sheet to shelf

A count that only checks the list against the shelf misses something. AccountingTools explains that cycle counters should trace items they see on the shelf back to the counting report, as well as checking the report against the shelf, in case some items are not recorded in the database at all.

Both directions matter in a shop:

• Sheet to shelf finds lines the system says you have but cannot be found: theft, damage, items sold without being rung up, or stock in the wrong place.
• Shelf to sheet finds goods on the shelf that the system does not know about: deliveries never captured, items received under the wrong code, or a supplier's sample that crept into stock.

Bring the records up to date before you count

The most common way a cycle count makes things worse is timing. AccountingTools warns that if outstanding inventory transactions are not entered before a cycle count, a counter's adjustment followed by the late transaction can leave the record less accurate than before. It notes this is particularly common when the same item is stored in more than one location.

A worked example in words: a staff member counts the phone accessories on the shop floor at noon. Yesterday afternoon, some of the same cables were moved from the storeroom to the floor, but the transfer has not been captured. The count adjusts the floor quantity up to what is physically there. When the transfer is captured later, the floor quantity goes up again, and the record now overstates what is on the shelf.

So before each count:

1. Make sure the morning's till sales have reached the system.
2. Capture any deliveries and transfers for the lines being counted.
3. Do not move stock in or out of the area being counted until the count is finished.

Investigate, then adjust

AccountingTools explains that errors found in cycle counts should lead to an adjustment of the inventory records and an investigation into the reason for each error. It describes investigating variances, and discussing them with the warehouse manager, as the most important cycle counting activity. The adjustment fixes the number; the investigation fixes the cause.

In a shop, the "warehouse manager" conversation is with the store manager or the person who receives deliveries. Typical causes, and what they point to:

• a missing high-value item: security or till procedures;
• a consistent overage: deliveries being booked before they arrive, or returns put back on the shelf without being processed;
• a difference that flips between two similar products: goods received or sold under the wrong code.

For a full count when you do need one, counting stock at a stock take covers the procedure; the AccountingTools explanation of cycle counting covers counting a small part of inventory every day so the whole stock is counted over time instead of in one annual count.

Recording counts in Achekam

With the Warehousing add-on, a business keeps stock locations such as warehouses, stores, bins and vans on the server, with the quantity on hand at each. A stock count sets a location's quantity to what was counted and records the difference as an adjustment. Count by location, so that the floor and the storeroom are counted and adjusted separately, which makes timing problems easier to spot.

There is a limitation to be clear about. Stock counts, wastage, transfers and opening quantities do not post to the general ledger; only till sales and till returns move the inventory account. A count corrects the quantity, not the value in the books.

So the value of the differences needs its own entry. At month end, total the value of the month's count adjustments and post it with a manual journal, debiting a stock losses account and crediting inventory for a net shortage, or the reverse for a net overage. A business can post manual journals; an unbalanced journal or one dated in a closed month is refused, and a posted journal is corrected only by a reversal. Keep the list of count adjustments with the journal as its support.

Choose tomorrow's first count now: one A-category shelf, counted before opening, with every difference written down and explained by the end of the day.

General guidance only, not advice on your own circumstances. Tax and payroll rules change: check the current position with the authority or your adviser.