Glossary
Quick definitions of key terms
Operations
ERPNext stock counts that find causes
A reconciliation that corrects the number without finding the reason guarantees the same difference next quarter. This guide covers counting often enough that the cause is still traceable.
How do I reconcile stock in ERPNext?
Use a Stock Reconciliation to set counted quantity and valuation for specific items and warehouses at a point in time. ERPNext posts the difference to a stock adjustment account, so quantity and value move together. Counting a small selection frequently beats a full annual count, because a difference found within days can still be traced to the transaction that caused it.
Before you start
- A stock adjustment accountSet on the company record. Differences post here, and if it is unset the reconciliation will not submit.
- An agreed count methodBlind counts, where the counter does not see the system figure, are the only kind that measure anything.
- A frozen moment per countMovements during counting produce differences that are artefacts of the count itself.
- Clear warehouse structureYou cannot count accurately into a warehouse that does not reflect where things physically are.
Running the cycle
Classify items by movement and value
Fast-moving or high-value items justify frequent counting; slow low-value items do not. Counting everything at the same frequency spends most of the effort where it discovers least.
Set a rota rather than a date
Assign each class a counting frequency and count a slice each week. The point is that no item goes long between counts, not that a big count happens on a particular day.
Freeze the location being counted
Stop movements in or out for the duration. If that is impossible, count at a natural pause and record the cut-off precisely so movements either side can be separated.
Count blind
Give the counter the item and location, not the expected quantity. A count sheet showing the system figure measures agreement rather than reality.
Post the reconciliation with quantity and valuation
Enter counted quantity, and valuation where the item's rate has also moved. Posting quantity alone leaves the ledger value untouched, so stock and accounts diverge on the very transaction meant to align them.
Where Stock > Stock Reconciliation
Investigate before accepting
Every difference has a cause: a receipt booked to the wrong warehouse, an issue never posted, a unit-of-measure error, or a genuine loss. Correcting the balance without finding the cause means agreeing to find it again next time.
Unit-of-measure errors show up as differences that are exact multiples. That pattern is a strong hint.
Track difference rate over time
One count tells you little. The trend by warehouse and by item class tells you where the process is weak, which is the actual output of the exercise.
What undermines counts
Counting quantity but not value
The warehouse agrees and the ledger does not. This is the most common way a reconciliation makes things worse.
Counting with movements running
The difference measures the movement, not the accuracy, and everyone stops trusting the result.
Showing the expected figure
Counters unconsciously confirm it. The count then proves nothing except that the sheet was read.
Adjusting without diagnosing
The balance is right for a day. The process that caused the difference is untouched.
Only counting at year end
By the time an annual count runs, the transaction that caused a difference is months old and effectively untraceable.
Confirming the reconciliation is sound
- The stock value in the Stock Balance report equals the stock account balance in the general ledger.
- Each posted reconciliation has a recorded cause, not just a corrected number.
- The stock adjustment account balance is explainable and reviewed by whoever owns the accounts.
- Every item class has been counted within its assigned frequency.
- The difference rate is trending down, or you can say why it is not.
- No reconciliation has been posted with a quantity change and no corresponding value where the rate had moved.
Questions people ask
Frequently enough that a difference can still be traced to the transaction that caused it. For fast-moving items that usually means monthly or better; for slow low-value items, once or twice a year is proportionate.
That depends on your auditor and on your sector. A well-evidenced cycle counting programme is often accepted in place of a full count, but agree it in advance rather than assuming.
Almost always because valuation was left blank while quantity was set. ERPNext moves value only when it is given a rate to move it to.
Look at the unit of measure and the conversion factor first. Consistent small differences on one item are usually a conversion applied in one direction and not the other.
Related guides
Differences you cannot explain?
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