Perpetual vs periodic inventory: which system fits your business
Perpetual inventory updates stock with every transaction; periodic inventory updates it after a count. Compare accuracy, cost, effort and when each makes sense.
Stokrio Team · · 5 min read
There are two ways to keep inventory records. A perpetual system updates stock every time something is received, sold or moved. A periodic system leaves the records alone until you count, then works out what was sold by difference. Most online sellers need the first; a few very small or simple shops get by with the second.
Key takeaways
- Perpetual: live stock numbers, counts check the records.
- Periodic: numbers refresh only after a physical count.
- Online selling, multiple channels and forecasting all need perpetual records.
- Cycle counts keep a perpetual system honest.
How periodic works
At the start of a period you know opening stock. You add purchases. At the end you count what is left. Cost of goods sold is the remainder:
COGS = opening inventory + purchases − closing inventoryNothing is recorded sale by sale. That is cheap to run but leaves you blind between counts: you cannot see what is about to run out, and you cannot tell shrinkage from sales.
How perpetual works
Every sale, receipt, return, transfer and adjustment writes a line to the records. The system always shows current stock and cost. COGS is recorded as sales happen. Counts exist to find errors, not to produce the numbers.
Comparison
| Perpetual | Periodic | |
|---|---|---|
| Stock visibility | Live | Only after a count |
| Stockout warnings | Yes | No |
| Shrinkage detection | Per period, with a trail | Hidden inside COGS |
| Multi-channel selling | Needed to avoid overselling | Impractical |
| Setup effort | Higher | Lower |
| Forecasting and reorder points | Possible | Not practical |
When periodic is enough
A market stall with a few products and one sales channel, where the owner sees the shelf every day, can manage with periodic counts. Anything with online listings, several locations, suppliers with long lead times or staff handling stock needs a perpetual system.
Keeping perpetual records accurate
- Receive against purchase orders, so quantities are checked on arrival.
- Record every adjustment with a reason.
- Run cycle counts to find and fix differences.
- Keep a stock ledger so any quantity can be traced.
How Stokrio works
Stokrio is a perpetual system: every change to on-hand stock writes a ledger line, and lines always sum to the stock figure. See the stock ledger and what is a reorder point for how live stock drives ordering.