For many businesses, the fiscal year will end on December 31st. The annual physical inventory, tedious and time-consuming, is an integral part of the closing process. After enduring a few, I have the following suggestions to make the process easier. Send notifications to all affected parties. Inform your suppliers that you will not authorize deliveries while physical inventory is in progress. Place a “non-delivery” notice on your purchase orders. Inform all transportation companies that regularly serve your facility of delivery and shipping restrictions. This will allow them to use their time more efficiently and they will appreciate your cooperation. Inform your auditors or accountants and have their staff carry out counting checks. Inform your sellers and customers about the downtime or non-shipping period. Post a deadline for placing orders to ship before the shutdown. Inform your employees well in advance to avoid a conflict with vacation schedules. This will also allow them to fit the tasks into their regular work schedules. Print and distribute a schedule of all activities planned during the physical inventory. Make sure it indicates who is responsible for each task. Do some cleaning Clean out the storage room (sweep and remove all trash). Straighten inventory items for easier counting and ensure each item is contained in its assigned location. If possible, avoid storing similar items in adjacent locations. Make sure all items are clearly labeled. Combine all quantities for the same item to reduce the number of locations as much as possible. Combine quantities into larger units for easier counting (i.e. stacks or packs of 20). Make sure all storage locations are definitive and clearly identified. Identify damaged goods and move them to a designated location or return them to the seller for credit. Identify obsolete inventory and move it to a special storage location. Dispose of it as soon as possible to eliminate storage and monitoring costs. Dust, deterioration, last year's inventory tags, and/or cobwebs are telltale signs of obsolete or excess inventory. Have counters record these observations on the count sheets for further review and action when the physical inventory is completed. Update warehouse floor plans with accurate storage locations. Determine what should not be counted, such as warehouse equipment, packaging supplies, and miscellaneous items that are not listed in inventory records..