What is stock management?

Stock management (definition)

Stock management is the process of managing the goods your business plans to sell. This involves acquiring, storing, organising and tracking those goods.

Stock management also involves keeping records of changes in your inventory over time. This helps you keep the right amount of each product or item in stock to keep up with customer demand.

Sales forecasting is another big part of stock management. If your inventory gets too low, you might not be able to keep up with your customers’ demands. But if your inventory is too high it will tie up your money and increase storage costs. You’ll also have to pay higher taxes because of the large value of your inventory.

It’s often useful to have safety stock, also known as buffer stock. This means keeping slightly more goods than you expect you’ll need. This is useful if demand is unusually high or if you need to exchange a faulty or damaged product.

Handy resources

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Your guide to inventory

Learn the strategies and techniques behind successful inventory management.

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Stock control with Xero

Track items and see what's selling with Xero's stock control software

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Disclaimer: This glossary is for small business owners. The definitions are written with their requirements in mind. More detailed definitions can be found in accounting textbooks or from an accounting professional. Xero does not provide accounting, tax, business or legal advice.