Inventorying in the Portable Restrooms Business

Question: Last year our company had a difficult challenge in conducting our company’s first year-end inventory. We began the process in mid-December and with the holidays, we were very rushed to complete this inventory. What tips do you have for us for this year’s physical inventory?

Answer: Preparation, preparation, preparation! In our years in business, we found that November is the best time to begin the year-end inventory process. For most PROs, the special event season is virtually over and some of those extra hours can now be turned to the all-important inventory process.

Do not think of this process as merely an “accounting requirement.” This is an opportunity to provide an accurate picture of your company’s assets, to better organize your entire operations, to uncover missing assets and to help with planning for the coming year.

November is the time to begin this process, and here are our suggestions:

One key person

Assign one person in your company to be in charge of the inventory. Although the entire company will be working as a team, there needs to be a person to make final decisions and to coordinate all activity.

Creating a plan

Determine and document which employees will participate in the inventory and establish two-person teams. We suggest pairing employees from different areas to work together as this creates an inquisitive atmosphere and a more thorough investigation.

Decide the order in which both the rental equipment and the office equipment will be counted and produce last year’s full inventory list along with equipment purchases and purchase dates made in the current year.

Develop a process whereby discrepancies will be resolved. Will the same team do a recount, or will another team independently do a count?

Assign a member of management to verify the final record counts before sending the report to the accounting or CPA firm.

Conduct training and planning session

After management has completed the written plan and reviewed it with the designated person in charge, we suggest a company-wide meeting in early to mid-November to present the entire process, the preparation needed and to schedule a training session well in advance of the actual inventory day (or days).

Be sure to emphasize that this inventory will include all rental equipment, service equipment, equipment parts and supplies as well as office equipment, supplies and all other company assets. Ensuring that everyone in the company is aware of the importance of the project and their role in the process is vital to the overall success.

Preparation of items to be inventoried

• Yard – Categorize and organize rental equipment by similarity. As an example, have special event units in one area, construction units in another area and unit parts in another. Use this same system for sinks, holding tanks and all other rental equipment. Evaluate the equipment as you are organizing. Equipment that is “near end of life” should be put together and after inventory, it may be dismantled for parts or even sold. This is an example of how year-end inventory can help with the next year’s planning.
• Equipment supplies – Organize similar supply items — such as cases of paper toilet or containers of deodorizer — in a common area. Attempt to have only one “in use” box or package open at one time.
• Parts and tools – Create dedicated areas for individualized parts and tools. For example, place all urinals together in a certain location. Do the same with roofs, skids, walls and toilet seats. Put like parts together to make counting easier and more accurate.
• Office equipment and supplies – Equipment to be inventoried in the office can vary by company. In general, teams will be counting computers, printers, phones, office equipment and office supplies. Serial numbers along with make and model numbers should be recorded by the appropriate inventory team.

Please check with your accountant or CPA and, if applicable, include breakroom items such as refrigerators and microwaves and other office equipment, such as desks and filing cabinets, may need to be included in the count.

As with equipment supplies, in the office, try to consolidate cases of paper and other supply items as much as possible. Again, for these few weeks, attempt to use one container at a time for “partial use.”

• Equipment on vehicles – A list should be created for each driver and reviewed with them while the inventory team is also present at the vehicle. Inventory items on the truck can include extra vacuum hoses, unit parts (such as extra toilet seats), hand trucks, toolkits, fire extinguishers and first-aid kits.
• Driver equipment - Assigned communication items such as cellphones and laptops also need to be included in the counts on the day of inventory. Serial numbers of these items should also be listed on the inventory form.
• Vehicles – Trucks and trailers need to be identified by listing the make, model, VIN and tag number.

Other tips

Once these preparatory actions have taken place, care should be taken in the time before the actual inventory date to maintain the organization that your company has taken.

As suggested with the various supplies, attempt to have only one “open” box and take items from that box before opening another.

Maintain your organizational plan for rental equipment when both removing equipment for delivery and returning equipment from the field. Inspect the yard daily to ensure that equipment is not being misplaced.

Conduct a post-inventory review

After your successful inventory, conduct a post-review company meeting. Get feedback from each team as to areas of success and areas that need improvement next year. Such a meeting also demonstrates the importance of this annual task.

Final thoughts

Year-end inventories should actually begin well in advance of year-end. Planning, practicing and organizing in November will make this task run more smoothly and accurately in December.