Stock Count Procedures for Equipment Rental Companies

Faith Kubicki

If you’re a one-location rental business with a smaller inventory, stock counts can be relatively quick and painless. As your business grows, however, the more challenging it can be – and the more important it is to have standardized, well-documented stock count procedures for your team.

Here’s what we suggest for more accurate inventory management:

Create – And Stick To – A Regular Stock Count Schedule

How often should you count your entire rental inventory? There’s no right or wrong answer, but it’s important to stay on top of your audits so that small discrepancies – no matter the cause – don’t become big problems. It doesn’t matter if inventory goes missing due to poor documentation, human error, theft, or something else entirely; not having the expected parts, merchandise, and equipment can lead to missed rentals (and missed revenue). It’s crucial to count your inventory often enough to find errors before they impact your customers.

For many rental companies, once a quarter or twice per year is more than manageable. However, if you only have time for one periodic count per year, consider running it before you compile your annual financial reports. Your accounting team will need to make corresponding changes in your General Ledger, so doing so before your year-end close is a smart strategy. Slower winter seasons also pose a prime opportunity for running your counts, with fewer customers calling your counter to rent new equipment.

If a full stock count is too much to manage all at once, cycle counts can help you break the process down into smaller, more manageable pieces. If you prefer to stick with a full physical inventory count, temporary hires can help you get through the process without taking your counter staff or operations team away from their day-to-day responsibilities. Once you’ve created a schedule and a resource allocation plan – be it for cycle counts or entire stock counts, make sure you stick to it – no excuses!

(Pre-Count) Notify Customers in Advance

If you’re temporarily closing down to take your inventory, let your customers know in advance. A quick phone call or email can reduce confusion if they call in to request a rental but can’t get through to your team. Proactively reaching out a few days before your count can help prevent missed rentals and build goodwill with your customers.

(Pre-Count) Prioritize Prep Work and Clean-Up

Designate a few days to prepare your count space before you get started. Make sure everything is in its proper location; remove any items that could get in the way of your count. If there are any items in those locations that won’t be part of the audit, clearly label them to reduce confusion. (For more prep tips, take a deeper dive into our Customer Care team’s recommendations for preparing your rental business for a physical inventory.)

(Pre-Count) Update Obsolete Inventory

Don’t waste time looking for products you no longer carry or rental equipment you’ve already sold off. Any time you remove products from your inventory, make sure to update your system of record so those items are not included in future count sheets. Similarly, if you notice missing part numbers or other crucial gaps, make sure to fill in accurate information before you get started.

(Pre-Count) Account for Open Purchase Orders

Have you recently purchased new items but not yet received them into your inventory? Make sure any equipment that’s recently arrived is in your system for full visibility.

(Pre-Count) Organize Your Count Lists

Stock count software can help you generate count sheets to print for each location, then group parts, merchandise, and equipment by make/model, bin location, or category/class. Instead of running to the yard to count bulldozers, the warehouse to count safety masks, and back to the yard to count generators, you can plot out a more logical path.

You’ll also need to decide if you want to include items with a current recorded quantity of zero on your count sheets. Including them can help you document overages if you find an unexpected reserve. If you find inventory that isn’t currently tracked in your system, add the equipment to the master file to track it moving forward.

(Pre-Count) Document Your SOPs

Once you’ve got an efficient stock count plan in place, document it in as much detail as possible. This can become part of your new employee training process. If you open a new branch or acquire another rental company, you can return to this documentation to standardize your approach across all your locations.

(Pre-Count) Review the Process With Your Staff

It’s a solid best practice for managers to review documentation with the employees who will be performing each count before they begin, even if they’ve been with the company for years. A refresher starts everyone off with clear expectations. A physical demonstration can also provide more clarity and resolve any questions before you get started.

(Day-Of) Assign Categories/Classes or Count Areas

Whether you assign items to employees based on category/class or physical location, let your teams know where they’ll be focusing their efforts. A management-level employee who is in charge of the entire count should maintain a master list of which employees are responsible for each type of product.

(Day-Of) Print Your Stock Count Lists

Make any last-minute changes, then print and distribute your inventory lists to your team.

(Day-Of) Freeze Your Data

If you’re keeping your business open throughout your audit, make sure new rentals or sales don’t throw off your counts. Temporarily suspend data entry in your rental software before you begin counting.

(Day-Of) Account for Inventory That Isn’t On the Shelf

When you start a new count, make sure to account for truck stock and equipment that’s in transit (being transferred between stores, on its way to a customer, on its way back from a jobsite, or offsite for repair). If you’re using rental inventory software, consider making non-shelf counts its own step in your stock count workflow.

(Day-Of) Account for Hand-Written Contracts

Check if your sales reps have any hand-written contracts that weren’t entered into your system. These items must be accounted for as well.

(Day-Of) Run Your Stock Count

You’ve done all the prep work; now it’s time to physically count your stock. Have your staff write their results on your count sheets as you go; once complete, enter those quantities into your rental software.

(Immediately Post-Count) Update Your Inventory Records

Compare your count sheets to your pre-count baseline records. If numbers don’t match, managers should look into the underlying reason. If the numbers are only off by a small quantity, start by re-counting that SKU to confirm that the count was correct. If they still don’t match, consider a deeper investigation. Was a piece of equipment transferred from one branch to another without an accurate record? Was a re-order processed into your stock room but not added to your rental software? Is there a larger issue with theft or insufficient receiving procedures? Once resolved, pass the changes back through your process managers, then true-up your book quantities to your count within your system of record.

(Immediately Post-Count) Un-Freeze Your Data

Don’t forget to unfreeze your inventory data and resume your normal processes as you return to typical day-to-day operations.

(Post-Count) Update Your Financial Records

Stock counts aren’t just for your operational team; your accounting team must make sure your financial records are accurate as well. For instance, if inventory is “missing” because it was sold but there’s no invoice or receipt to correspond with the sale, you’ll need to go back and account for the transaction. Similarly, if you report on your average cost per item or allocate costs to different locations, you’ll need to update those records as well.

If you’re comfortable automating parts of this process, you can speed up some of the more routine tasks. For instance, you can have journal entries created during a cycle count close auto-post to your General Ledger the following day, without having to post it manually.

(Post-Count) Do Something (Else) With Your Inventory Data

Once you finish counting, you’ll need to investigate any discrepancies, update your quantities in your rental software, and make any necessary adjustments on the accounting side. But, that shouldn’t be the end of the road.

The goal of stock counts is to make sure you know how many products you have on hand at the current moment, but branch managers should review the data the process generates to find areas for improvement. If you’re consistently running out of specific items that your ERP says should be in stock, can you implement procedures to keep a closer eye on that SKU? If one location has higher demand for a particular piece of equipment that tends to sit in a different location’s yard, can assets be transferred to capture more rentals? Strategic rental inventory tracking doesn't just help you with day-to-day operations, but rather sustainable long-term growth.

Improve Your Stock Count Procedures with InTempo’s Rental Inventory Software

InTempo Enterprise helps you track every item in your inventory – from rental equipment to parts and merchandise. Automate key processes for faster stock counts; use cycle counts to reduce the burden; standardize your procedures across all your locations; turn your data into actionable insights for your management team. For a deeper look at our rental inventory solutions, contact us today.