How do I check how a holiday lighting installer stores and tracks its light inventory?

Walk through the warehouse or storage units. Note the conditions: dryness, protection from pests and how well items are organized. Damaged or tangled stock suggests poor handling and extra replacement costs. Do this in the off-season, when nobody is rushing.

Ask how lights are labelled. Some installers keep custom sets for each customer, which makes the inventory part of the service relationship. Others use general stock moved from job to job. Learn which model the business uses and what happens to the sets if a customer leaves. Ask also whether any of the lights were bought on credit or are still being paid for, because that affects what moves to you.

Compare records with reality. Select a few bins at random and count them. Ask how items are logged out, returned and written off. Check testing procedures, since faulty strings found on install day cost time and trust. Finally, look at the money tied up. Ask how stock was purchased, whether anything is still owed, and how it is treated in the financial statements. Your accountant can help you decide how to count and price the stock in the purchase.

Key takeaways

• Inspect storage conditions and sample-count bins against the records.
• Ask whether lights are kept in customer-specific sets or shared stock.
• Find out how items are tested, written off and financed.
• Count a random sample of bins against the records.