Why is it important to maintain accurate inventory records?

Maintaining accurate inventory records is crucial for preventing stockouts and managing cash flow. When inventory levels are well-documented, businesses can ensure that they have the necessary products available to meet customer demand. This helps avoid the scenario where customers cannot purchase desired items due to insufficient stock, which can negatively impact sales and customer satisfaction.

Accurate inventory records also allow for better cash flow management. By knowing exactly what products are available and their associated costs, businesses can make informed purchasing and pricing decisions. This helps in avoiding over-investment in inventory that may not sell quickly, or under-investment that may result in lost sales opportunities. Overall, maintaining precise inventory records supports smooth operations, enhances customer experience, and facilitates effective financial management.