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Choosing the Right Inventory System for Your Business: Perpetual or Periodic?

Are you tired of the endless struggles and headaches that come with managing your business’s inventory? Do you find yourself constantly questioning whether you have enough stock or if it’s time to reorder? Well, fret no more! In today’s blog post, we’re diving deep into the world of inventory systems, specifically the perpetual and periodic methods. Buckle up as we explore their pros and cons, helping you make an informed decision on which system is perfect for your business needs. Say goodbye to inventory woes and hello to streamlined operations – let’s get started!


Introduction – What is Inventory Management?


Inventory management is the process of tracking and controlling inventory. It includes managing inventory levels, stocking levels, and reordering stock. Inventory management is a critical part of any business, as it helps to ensure that products are available when customers need them and that businesses do not overstock or run out of products. There are two main types of inventory systems: perpetual and periodic. Perpetual inventory systems track inventory in real-time, while periodic inventory systems only track inventory at specific intervals (usually once per month). Both types of systems have their own advantages and disadvantages, which will be discussed in more detail below.


What is a Perpetual Inventory System?


A perpetual inventory system is one in which businesses track their inventory levels at all times. This information is generally kept in an computerized database, and businesses use it to generate reports on their current inventory levels, as well as to make decisions about future purchases.


Perpetual inventory systems have a number of advantages over periodic systems. First, they provide businesses with up-to-date information about their inventory levels, which can be very useful in making purchasing decisions. Second, they can help businesses avoid stockouts, since they will always know how much of each item they have in stock. Perpetual inventory systems can save businesses time and money by reducing the need for physical inventory counting.


There are also some disadvantages to using a perpetual inventory system. First, they require businesses to invest in computer hardware and software, as well as train staff on how to use the system. Second, they generate a lot of data that must be managed and stored properly. If not used correctly, perpetual inventory systems can lead to inaccurate information about a business’s stock levels.


What is a Periodic Inventory System?


There are two main types of inventory systems: perpetual and periodic. Perpetual inventory systems are real-time, meaning that they are constantly updated as items are sold or received. Periodic inventory systems, on the other hand, are not real-time and are only updated at set intervals.


So, what is a periodic inventory system? A periodic inventory system is an inventory system that is only updated at set intervals. This means that the information in the system is not always accurate, as it does not take into account items that have been sold or received since the last update.


While a periodic inventory system is not as accurate as a perpetual system, it can be less expensive to set up and maintain. For businesses that do not need real-time data on their inventory levels, a periodic system may be the right choice.


Pros and Cons of Perpetual vs. Periodic Systems


When it comes to inventory management, there are two main types of systems: perpetual and periodic. Perpetual systems offer real-time inventory data, while periodic systems provide a snapshot of inventory levels at specific intervals. So, which type of system is right for your business? Here are some pros and cons to consider:


Perpetual Systems:



-Offer real-time inventory data, so you can always see how much stock you have on hand. This is ideal for businesses with high turnover rates or who need to keep track of many SKUs.

-Can be integrated with POS systems for even more accurate data tracking.

-Allow you to quickly and easily place orders when stock levels get low.



-More expensive than periodic systems.

-May require more staff training to use effectively.

-Can be complex to set up and manage, especially for businesses with large inventories.


Periodic Systems:



– More affordable than perpetual systems.

– Simpler to set up and manage, making them ideal for small businesses or those new to inventory management.

– Provide a snapshot of inventory levels at specific intervals, so you can still track trends over time.


Cons:  – Do not offer real-time data, so you may not catch stock outs until your next physical count.  – Cannot be integrated with POS systems.  – Counting


Choosing the Right System for Your Business


In order to choose the right inventory management software for your business, you need to first understand the difference between perpetual and periodic inventory systems. Perpetual inventory systems are constantly updated in real-time, meaning that as soon as a sale is made or a product is received, the inventory records are updated immediately. On the other hand, periodic inventory systems are only updated periodically, typically at the end of each accounting period.


So, which type of system is right for your business? If you have a very small business with only a few SKUs, then a periodic inventory system may be sufficient. However, if you have a larger business with many SKUs and sales happening on a daily basis, then you will likely need a perpetual inventory system in order to maintain accurate records.


Another factor to consider when choosing an inventory system is how often you perform physical countdowns of your stock. With a perpetual system, countdowns can be done more frequently since the records are always up-to-date. With a periodic system, countdowns should be done less often since it takes more time and effort to update the records after each physical count.


Ultimately, the decision of which inventory system to use for your business comes down to understanding your needs and determining what will work best for you in terms of accuracy, efficiency, and cost.




In conclusion, choosing the right inventory system for your business is a major decision. Perpetual and periodic systems both offer distinct advantages depending on the size of your business and how often you need to update stock levels. Ultimately, it’s important to consider all aspects of an inventory system before deciding which one works best for your unique needs. With the help of this article, we hope you are now better informed about the differences between perpetual and periodic inventory systems so that you can make an educated choice when selecting a system for your business.

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