Stocktake and Stock Valuation FAQs
Clients often pose questions to us in regard to stock taking and stock valuations. Below are the more frequent ones. If you have any others please contact us on free phone 0800 026 720 or mobile 07850 589481
Q Will I need a stocktaker when I buy or sell a business?
A definite yes; By available information you will know about rent, rates, etc or have agreed a figure for freehold, lease, rent, goodwill fixtures and fittings, but not the stock. The vendor may quote a price for the stock and it could be a genuine belief that that is the case.
Is it correct, how much is shop soiled, obsolete, short or out of date? We have been given estimates for stock which have varied from the good to the totally ridiculous. A wrong estimate on the overall gross profit factor used over a period can build in quite large discrepancies. We have been informed of stocks expected at one level and they have turned out to be in extreme cases as much as 40 % out, up or down! A fair independent unbiased valuation is so important to both vendor and purchaser, this is our mission.
Warning!! : Never, ever agree to a set of % margins to be included in the contract without proper consultations with your stocktaker.
On occasion we have seen or heard or experienced of cases where the margins have been in the contract to the disadvantage of one party. Sadly this has at times been large national companies. If either party has agreed to this, or it is the contract, it makes it almost impossible for us to redress the balance. We would suggest that the terms stock at valuation or similar are used.
Q: What information will I get?
A: On completion of a transfer valuation we issue a certificate which will show the cost of the stock in the grouping. Standard vat, 5% vat. Zero or exempt, there may also be figures for the news rounds, consumables such as till rolls, bags etc. and other accounts. The certificate is issued to both parties who can use it to arrange release of funds. This is followed in a few days with a detailed stock valuation summary which shows the value of the stock in trade by product groups. With an annual we do not normally issue a certificate only the stock summary for use by your accountant to compile year end trading results.
Q: What will it cost?
A: It is normal practice in the industry to charge a fee based on a % of the cost value of the final valuation. This can vary in as much as stock consisting of £65,000 of golf clubs, shot guns, designer clothing, large builders merchants, is very easy to count. The same value in greetings cards, haberdashery or transistors for example is a very different matter. The % rate has to be ignored in some high value sites and an industrial “day rate” applied. Whatever the contract is we are sure we can give you a competitive quote.
Q: Do we have to have the stocktake on the actual day of our year end?
A: No, if we are given the sales and purchase details on the forms provided by us over the period we can make a free of charge trading adjustment engage an experienced full time stocktaker you know it makes sense.
Q: Do I need to engage my own stocktaker?
A: This is not necessary as in most cases we act for both vendor and purchaser, usually the stocktake fee is then shared equally by them. The independent and un-biased nature of the stocktaking team makes certain that the result is fair to both parties.
Q: Do I really need to carry out a financial year end stocktake/valuation?
A: We would always advise that if you provide your accountant with accurate up to date stocktake information he can insure that you are not paying more tax than you should.
Q: How much booking notice should I give?
A: As with most things in life the longer the better, if it for a transfer of ownership we can always accept a provisional booking, we fully understand that often there are last minute hitches with the legal side. an early booking helps us with our work.
Q: How long will it take?
A: We always provide a team large enough to complete the contract on the day, each and every stocktake is on the basis of "job and finish " so it takes as long as needed and is only finished when all parties are satisfied.
Q: Do I have to close the business whilst the stock take is being done?
A: No we have methods and procedures that we can use to ensure that the business can remain open. This avoids upsetting customers and allows the minimum disruption to your operation.
Q: Do you think that the Inland Revenue will accept any estimate of my stock holding?
A: No, that is probably not in the event of a full scale investigation, certificates from an established professional stocktake company are however normally accepted without problems
Q: Can you carry out the work at the weekend or even bank holidays ?
A: Yes we can, and please note we do not raise our fee for weekend or bank holiday work.
Q: My news round is on a computer how do we account for this?
A: We will accept the figures from the computer for annuals and would not include that value when we calculate your fee.
Q: Can you tell me what discounts you will be using?
A: No sorry until we are site this is not possible. When we carry out the stocktake we tend to use the clients marked prices as a guide and for our convenience, at completion we deduct any vat and a discount to arrive at a cost. The discount we use is calculated with the marked prices in mind the example we often quote for this is that a tray of cola from the C&C will cost all parties the same but a trader in a competitive area will have a price which is very different to the same product sold in a petrol station on the motorway. Remember the wrong information is the most expensive.
We welcome enquiries from throughout the UK. For a free quotation for all your stocktaking or valuation requirements please contact us on01438 355 049 or mobile 07850 589 481. The only numbers you need for a cost effective accurate stocktake or please fill out our Enquiry Form.
