How to Investigate Stocktake Variances

About

Stocktaking is a valuable tool for monitoring stock health and identifying variances between system (H&L) records and actual stock levels. However, it doesn't explain why those variances occur. Identifying the cause usually requires further investigation and the process of ruling out possible contributing factors.

This guide will walk you through:

Using the Stocktake Report to catch variances early
Common Variance Causes
Understanding the Prepare Stocktake step
Narrowing the variance timeframe for unknown causes

For more information on the stocktaking process, see the Stocktake Training Guide. If you need further assistance with stocktake variances, contact our H&L Support team. You can log a support ticket directly from the client portal.

Using the Stocktake Report to catch variances early

Before processing a stocktake, it's important to review and resolve any fixable variances. This helps ensure your stock levels are accurate and prevents avoidable variances from carrying into your finalised results.

Use the 4: Stocktake Report step to review all counted items and identify discrepancies between the counts entered and the prepared H&L stock on hand totals. The report allows you to:

See whether an item was counted
View variance quantity, dollar value, and percentage
Filter the report to show only counted items or only items with variances

By reviewing this report before processing, you can catch and correct several types of fixable variances, including those caused by:

Missed or incorrect counts
Unentered or unprocessed Stock Movement
Unchecked 2. Prepare Stocktake options

Fixing these issues while the stocktake is still in progress allows you to resolve problems directly, resulting in cleaner, more accurate final figures.

Once a stocktake is processed, it becomes locked and can no longer be edited. Any corrections will need to be made in a future stocktake or through a stock discrepancy.

Common Variance Causes

Inaccurate or incomplete stock counts

Mistakes during the counting process can lead to variances that don't reflect actual stock differences.

Cause	Identification / Prevention
Count typos	Review the 4: Stocktake Report for unusual or outlier count and variance values. Verify questionable counts with a recount.
Items missed in counts	Large variances or items not counted in the 4: Stocktake Report may indicate a missed item or an uncounted storage or display location. Use a consistent, methodical approach (e.g. left to right, top to bottom) to reduce missed items.
Stocktake scanner (PDE) issues	Variances can result from: Not deleting previous counts Importing the wrong file, or importing the correct file more than once Not manually adding unmatched barcodes from the output log For detailed instructions and tips, see Quick Troubleshooting for Denso 1500 Devices.
Miscounts in previous stocktake	An incorrect count in a previous stocktake can cause a reverse (+/–) variance in the current one. Use the Reprint report for the selected stocktake or Reprint a saved report options on the Stocktake List screen to check past variances. [Reference Visual]

Other stock movement functions

Variances can also result from invoices, transfers, discrepancies, or wastages not being entered, not processed, or entered incorrectly.

Cause	Identification / Prevention
Stock Movement not entered or entered inaccurately.	Use the History tab in an inventory item's Detail screen to review recent stock movements Unrealistic values or missing records may indicate missed or inaccurate stock movement entries [Reference Visual]
Stock Movement entered but not processed	H&L stock on hand values are only updated once stock movements are processed. Ensure all Receive, Transfer, Wastage, and Discrepancy records are processed before preparing the stocktake (step 2). If unprocessed records are found after counting, use the Re-prepare Stocktake button to refresh the snapshot.
Unreported Transfers	If stock is moved between stock keeping locations without being recorded in H&L, offsetting variances will appear across locations. Use the Stock Take Variance (Consolidated) report to confirm if positive/negative variances offset each other between locations. [Reference Visual]
Discrepancies between delivered stock and invoices.	Always verify deliveries against invoices. Use credit claims or adjust receive records if delivered quantities don’t match the invoice values.

Stocktaking process caused variances

Stock movements (like invoices, transfers, and wastage) are reflected when processed. Sales are only deducted once End of Shift (EOS) is run. Understanding this timing is key to avoiding variances during stocktake preparation and counting.

Cause	Identification / Prevention
Prepare Stocktake options not correctly selected	Preparing the stocktake (step 2) creates a system snapshot that’s later compared to entered counts to calculate variances. Several options in this step may need to be enabled based on when the stocktake is being performed and whether stock movements are still in progress. For a detailed explanation of each option, see Understanding the Prepare Stocktake step.
Stocktake performed during trading hours	If a stocktake is counted during trade, the system snapshot may not match physical stock due to ongoing sales. Where possible, stocktakes should be prepared and counted either before or after trading hours. If preparing and counting after trade but before EOS, select the Subtract current shift sales from quantity at stocktake option before preparing.
Stocktake performed over multiple days	Prepared stocktakes reflect a single point in time. If counting is spread across multiple days, the snapshot becomes outdated and variances may occur. If there’s a delay between preparing the stocktake and starting the count, click the Re-prepare Stocktake button to refresh the snapshot For stocktakes too large to complete in one session, split them into smaller, rolling stocktakes by stock group (e.g. Week 1 – Beer, Week 2 – Ciders and RTDs, Week 3 – Wines, Week 4 – Spirits).
Zeroing uncounted items	The Zero uncounted items option (step 5) sets the stock on hand to zero for any item without a count, creating a variance against the prepared value. Only enable this option if you’re confident that all items included in the stocktake have been counted. [Reference Visual]

Setup caused variances

Persistent variances for the same item(s) across multiple stocktakes often indicate a setup issue. Check the following for setup configurations that may contribute to variances:

Cause	Identification / Prevention
Factor divider	An incorrect Divider can cause too much or too little stock to be decremented with each sale Example: The “single” and “carton” factors both have a divider of 1. When a single is sold, it decrements a carton of stock.
Item type	An incorrect Type value against the inventory item may lead to incorrect decrement behaviour. Types and behaviour: Stock – Decrements on sales Non Stock Keeping Item – Does not decrement; resets to 0 at End of Shift Recipe (Sales Based) – Recipe item doesn’t decrement; ingredients do Recipe (Production Based) – Recipe item decrements on sale; ingredients on production Package – Package doesn’t decrement; detail items do
Recipe setup	Missing ingredients or incorrect quantities in a recipe can cause inaccurate system stock on hand values. Use the Ingredient Of tab on the inventory item’s Detail screen to view where it's been used in recipes.
Duplicate items	If the same product exists under multiple inventory records, sales may decrement from one, while stock movement affects another, leading to variances on both. Mark duplicates as Run Down / Deleted, transfer or write off remaining stock to zero, and ensure Exceed POS keys link to the correct item’s PLU.
POS keyboard setup	If the POS key caption doesn’t match the PLU it links to, the wrong item or factor may be sold and decremented. Make sure key captions clearly reflect the item being provided to the customer.
Open food & open beverage items	Open Food & Bev items allow you to sell and track revenue for items that haven’t yet been created in H&L. Because sales and stock movement aren’t linked to a specific inventory item, their use can lead to variances. From the POS, these open items can also be misused to sell products that do exist in H&L, preventing the correct item from being decremented. Open Food & Bev items should only be used as a temporary solution, until the correct item is created in H&L. Open Food & Bev item sales can be tracked in Audit Trail. If the item allows a free-text description, the free-text description can be verified in the Details tab after highlighting the sale in Audit. [Reference Visual]
Stock keeping locations and automatic transfers	Items may be linked to a different stockkeeping location than their physical venue location. To verify this, check each item’s Stock In Location > Detail tab. If a stockkeeping location has been set, the item should be counted in the stocktake for that location instead. You can also check Maintenance > Locations to see if an entire location has been configured to use another stockkeeping location. If so, no separate stocktake is required for that location. Its stock should be included in the stocktake for the assigned stockkeeping location.

Other variance causes

Cause	Identification / Prevention
Staff consumption not tracked	If staff consumption isn’t recorded in H&L, it will create a variance between physical and system stock. Charge unpaid staff consumption to an Internal Debtor account to decrement stock without including these sales in reportable revenue or tax payable figures.
Over-pouring or incorrect portion sizes	Over time, these practices can result in significant variances between system and actual stock on hand. Provide staff training, use jiggers, or implement pour control tools to reduce the frequency and impact of these variances.
Theft	Theft by customers, staff, or third parties reduces physical stock without corresponding system entries. Use security camera footage to investigate. You can cross-reference Audit Trail transaction timestamps with footage to identify inconsistencies.

Understanding the Prepare Stocktake step

The Prepare Stocktake step captures a snapshot of your current stock on hand in H&L. These values are later compared to entered or imported counts to calculate variances. When the stocktake is processed, those variance values are used to update system (H&L) stock on hand values.

Sales are decremented from stock on hand when End of Shift is processed. If you're counting stock after trade, you can account for the day's sales in the snapshot by either:

Processing an End of Shift before preparing the stocktake
Ticking the Subtract current shift sales from quantity at stocktake checkbox before preparing

There are three additional optional checkboxes in the Prepare Stocktake step. These are less commonly used and depend on your venue’s stock movement processes:

Subtract current credit claims from quantity at stocktake – Use if credit claims are pending
Subtract current consignments from quantity at stocktake – Use if there are consignment orders that haven't been received
Include Stock Received Batches in Stocktake – Use if you have stock batches that have been received but not yet processed through Receive Stock

You can also click the Re-Prepare Stocktake button to update the stock snapshot. This is useful when stock movements (such as invoices, discrepancies, wastage, or transfers) have been processed after the original preparation but are reflected in your stocktake counts.

Narrowing the variance timeframe for unknown causes

Identifying the cause of a variance can sometimes be difficult. For intermittent or recurring variances affecting specific items, conducting spot checks or small stocktakes at frequent intervals can help narrow down the timeframe in which the variance occurred.

Reducing the timeframe reduces the number of historical stock movements and sales records you may need to review, or the duration of security footage to check. It's much easier to investigate a variance when you know it occurred in a specific location on a specific day or week, rather than reviewing activity spread over several months.

Reference visuals

Reprint Historical Stocktake Reports

Stock (Inventory) History tab

Stock Take Variance (Consolidated) Report

Zero uncounted items option

Viewing open food & open beverage items in Audit