Using Stock Ageing Analysis to reduce Costs and Write Offs

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Using Stock Ageing Analysis to reduce Costs and Write Offs

What is a Write off?

A write-off is an accounting term which means a reduction in the value of an asset or earnings of an organization whose value has been eliminated. For organizations such write offs include bad debts and fixed assets that have now become obsolete.

Stock is one of the most important prestigious investments made by any organization that sets its foundation in the world of business. Optimum quantity and turnover period is essential for an organization to be successful.

What is Stock Ageing Analysis?

Stock Ageing Analysis reports help in monitoring stocks and identify slow moving inventory or such stocks that is not converting into prospects. In Tally.ERP9, Stock Ageing Analysis report displays the time period of the stock holdings. Tally.ERP9 users has a flexibility as they can define their own ageing slabs (Press F6 for details) as the report of Stock Ageing Analysis comes with period wise division of the stock in hand so that it is possible to differentiate between the old and current stocks. The Ageing Analysis report comes with a default ageing period of more than 45 days, 45 to 90 days, 90 to 180 days, and less than 180 days. Users can define the ageing slabs, depending on their requirement. The age of the items, by default is set at from the date of purchase.

The report will be displayed in a columnar format which will show item details, quantity, value and age wise break-up to the user. In order to derive the report for all stock items, the user needs to click on Primary from the List of Groups.

To view the Stock Ageing Analysis Report; the user needs to follow the below mentioned steps:

Step 1: Go to Gateway of Tally (GOT)

Step 2: Click on Display

Step 3: Click on Inventory Books

Step 4: Click on Ageing Analysis

Step 5: Select the group for which the Ageing Analysis is required.

The Ageing Analysis report assists the management to identify which batches have already expired and even list those batches that are going to expire. Stock Ageing Analysis plays a very crucial role for industries dealing with perishable goods where goods, stocks or products that cross the expiry date are of no value.

How can Stock Ageing Analysis help in reducing Costs and Write-offs?

Stock ageing analysis reports are prepared based on monitoring and identifying slow moving stocks or those products that are not generating revenues for the organization. Suppose, a company purchases some stock and incurred some cost of production. But, somehow the stocks is not getting sold. It will try to sell it off at any cost, within its validity period, in order to avoid incurring any loss on the organization’s part.

In such conditions, a report called the Ageing Analysis report is prepared based on determining the age of the product, in terms of valuation done on the basis of the date of purchase of such stocks that helps the management of the concerned organization in taking fruitful decisions.

 

By | 2019-02-28T10:25:42+00:00 February 28th, 2019|General, Inventory, tally, Tally|0 Comments

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