While there’s no magical inventory solution that’s a perfect fit for all companies, it’s critical for cannabis businesses to identify an inventory system that’s effective for their specific needs and requirements.
Inventory management can play a large role in maintaining productive and compliant day-to-day operations and when seeking investment, as it has a direct impact on a business’s bottom line. Modern cannabis businesses are often faced with highly complex inventories: tracking products from seed-to-sale, overseeing processing or extraction, continually meeting customer demand and navigating a dense web of regulation. An incomplete, rudimentary or outdated inventory system can lead to serious financial discrepancies that are guaranteed to cause plenty of headaches for accounting professionals and decision makers down the road.
Firstly, ensure your company is utilizing a cloud-based accounting software. Right away, that will simplify both accounting and inventory processes. Further, by taking advantage of the 24/7/365 connectivity provided by the cloud, you can be sure your company financials and inventory are up-to-date and accurate, whenever and wherever.
Running a cannabis business requires an investment of time and money from the very start. The good news: You don’t have to spend an arm and a leg on your inventory management system to find something that works. There are solutions that marry affordability with efficiency, such as Trade Gecko, Fishbowl and Zoho. But, keep in mind, you need to ensure your chosen inventory system aligns with your overall business structure, offerings and goals. While the price tag is certainly an important, the system’s capabilities are more vital. Some do’s and don’ts to consider:
Don’t Use the Native Functionalities of Your Cloud Accounting Software
While your accounting software may provide native functionality when it comes to inventory tracking, it’s not robust nor complex enough to maintain the often-complicated inventories of modern cannabis businesses. For instance, your business might be cultivating numerous plants across several grow sites, tracking plant movement and processing or packaging it internally. You may be selling your business’s cannabis products at other dispensaries in your state; in turn, you might supply other dispensaries’ product at your counter as well. The truth is: cannabis businesses need a more sophisticated solution to track sales, monitor supplies, oversee shipments and remain informed of where products are coming from and how frequently to re-order. Too often, native functionalities cannot provide this level of visibility.
Do Look for Direct Integration
That being said, make sure your inventory system directly and seamlessly integrates with your cloud accounting software. You shouldn’t have to manually upload information when setting up your inventory software. With today’s technology, the two systems should automatically “talk” and share information between each other. The systems’ websites will often say whether they can integrate with various accounting platforms, but it’s worth doing a little extra research. For example, both Fishbowl and Trade Gecko can be directly integrated with Xero. Business leaders can even explore a demo environment to see what the integration will look like between the two systems.
Do Investigate Invoicing Capabilities
Some inventory management systems come with an invoicing capability. This is a huge plus as it can simplify the invoicing process – or even automate it – reducing the risk of error when transferring data between programs. A consolidated system that automatically links inventory and invoicing means business leaders will be able to easily update invoices, mark orders as paid or unpaid, filled or unfilled, while keeping a close eye on their stock. Moreover, some inventory solutions offer dynamic reporting displaying real-time sales reports and fulfillment processes – making it easier than ever to work with vendors, identify and eliminate unnecessary costs and control cash flow.
Don’t Automatically Go with the First Solution You Find
Choosing an inventory management system requires plenty of thought, and there are no two solutions that look exactly alike. So, don’t rush into a commitment just to get it over with. Instead, spend enough time learning about various systems and what they offer to guide a confident purchasing decision. Starting off with the wrong system and having to switch later wastes time, money and can undo many of the efficiencies you worked to implement.
Do Consult an Accounting or Business System Expert
Working with accounting and business systems expert can provide insights related to your short- and long-term goals. They can help you understand exactly how your specific inventory needs to be tracked, depending on your products’ volume and price-point, in order to avoid serious discrepancies or incompliance. In addition, an accounting partner can act as an invaluable resource when it comes to choosing and personalizing an inventory management system, identifying inaccuracies or inefficiencies and serve as a point person when contacting the software developer to customize your system.
Finding the right inventory management system can help cannabis businesses cut costs and improve efficiencies while simultaneously remaining compliant. It can also give businesses leaders actionable data to respond to changing market conditions, business needs and take advantage of growth opportunities as they arise. This visibility is a necessary aspect of ensuring your cannabis businesses can achieve long-term, sustainable growth.
At Rebel Rock, we leverage our wide-ranging cannabis industry experience to provide individualized recommendations for inventory management, regardless of your business’s size or complexity. Contact us today to learn more.