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How it works

A stock count produces two numbers per line and one question: what is the difference worth? Valuing the variance is what turns a count sheet into something a finance team can act on, because a hundred missing low-value items usually matters far less than three missing high-value ones.

Shortages and overages both matter, and for different reasons. Shortages are shrinkage — theft, damage, miscounting or unrecorded issues. Overages usually mean goods were received without being booked in, which means the payable is missing too. SKUs appearing in only one of the two lists are a third category, and normally point at a master-data problem rather than a physical one.

Variance = counted − system · Value = variance × unit cost

  • Shrinkage — counted less than the system says — value lost
  • Overage — counted more than the system says — usually unbooked receipts
  • Net variance — shrinkage and overage combined

Worked example

8 SKUs counted against system quantities

Inputs

SKUs in system8
SKUs counted8
Stock value1,031,300

Results

Shrinkage−15,925
Overage+1,920
Net variance−14,005

A net 14,005 shortfall on just over a million of stock — about 1.4%. Most of it is five missing units of one high-value SKU, which is why valuing the variance matters more than counting it.

Frequently asked questions

What format should the two lists use?

System stock as SKU, quantity, unit cost — one line each. The physical count as SKU, quantity. A header row is optional and is skipped automatically.

What shrinkage rate is normal?

It varies widely by sector — retail commonly runs 1–2% of stock value, while a controlled warehouse should be well under 1%. What matters more than the level is the trend and whether the same SKUs recur.

Why would I count more than the system says?

Usually goods received but not booked in, returns processed physically but not in the system, or an earlier count that was wrong. All three mean the accounting records are behind the warehouse.

Is my ledger data uploaded anywhere?

No. Every line you paste is parsed and matched inside your browser. Nothing is transmitted to us, nothing is stored, and closing the tab discards it. That is the whole reason this tool exists in this form.

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