Small Business, Big Problems: What to Do If Your Inventory Is Stolen

It’s not uncommon for organizations that have warehouse components to suffer considerable losses because of inventory shrinkage resulting from theft, usually by people within the company. The good news is that it’s possible to prepare for or prevent the occurrences of stolen inventory with a few processes and the proper tools. With that in mind, there isn’t a single solution that can address the problem. Often, it requires a good combination of robust processes, security systems, and insurance coverage.

Get commercial property coverage

Sometimes, prevention alone isn’t enough—you also need insurance, specifically commercial property coverage. As its name implies, it helps businesses protect their physical assets from harm or theft. For example, if equipment, materials, and other items were to be damaged or stolen, the insurance provider would cover repair or replacement costs. With it, you can lessen the financial impact that inventory theft may cause.

While often confused with liability insurance, the policies aren’t the same, so make sure you pick the right coverage. To learn more about it, you can find out the differences here.

Account for the lost inventory

Because the inventory of a business affects its income sheet and balance statement, the inventory account’s accuracy is important. In a perfect world, it would require no more than recording any business purchases and making adjustments for the cost of the goods that are sold with the price that reflects the same number of units. But in reality, it’s rarely that simple. And inventory may be lost to obsolescence, damage, and in this case, theft.

When this happens, you must record any losses on the income statement of your company to ensure it remains updated. How it’s reported will largely depend on the size and how it happened. However, there aren’t any fixed rules in doing so—it depends entirely on the business and your discretion.

Invest in security technology

Although recruiting the right staff and proper training can make a difference in reducing instances of stolen inventory, it’s worth considering the investment in security technology to level up protection and discourage theft. For example, video surveillance systems won’t just enable you to check on employee activities but will also provide a visual deterrent for those who may be looking to steal some items from the company.

Using RFID tags is another way to catch any potential thieves, as these small stickers can trigger an alarm if the products they’re on leave the premises before the deactivation of the tags. It may sound simple, but you’ll be surprised at how effective their use can mitigate inventory theft.

Conclusion

Theft can be unavoidable in business, regardless of company size or industry. However, if they aren’t prevented or addressed systematically, they may cause an organization to incur significant losses. Fortunately, it’s possible to minimize the risks of theft from occurring and keep the company prepared. By following the abovementioned tips, you’ll be able to prepare for, if not prevent, inventory theft effectively.