Accounting Glossary

What Is Stock Management?


Stock Management (Definition)

Stock management is the process of managing the goods your business plans to sell. This involves acquiring, storing, organising and tracking those goods.

Stock management also involves keeping records of changes in your inventory over time. This helps you keep the right amount of each product or item in stock to keep up with customer demand.

Sales forecasting is another big part of stock management. If your inventory gets too low, you might not be able to keep up with your customers’ demands. But if your inventory is too high it will tie up your money and increase storage costs. You’ll also have to pay higher taxes because of the large value of your inventory.

It’s often useful to have safety stock, also known as buffer stock. This means keeping slightly more goods than you expect you’ll need. This is useful if demand is unusually high or if you need to exchange a faulty or damaged product.

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