What is Perpetual Inventory?
Perpetual inventory is a system that continuously updates inventory records in real time as each transaction occurs.
Definition
Perpetual inventory continuously tracks stock levels by recording every receipt, issue, sale, transfer, and adjustment as it happens, so the system always reflects current on-hand quantities and value. This contrasts with periodic inventory, which updates balances only at intervals through physical counts. Perpetual systems enable real-time availability checks, accurate costing, and tighter control, and they pair naturally with barcode and RFID scanning. They still require cycle counting to reconcile records with physical reality over time.
How Perpetual Inventory Works in ERP
An ERP running perpetual inventory posts an inventory and accounting entry for every stock movement, keeping quantity-on-hand and inventory valuation current at all times. This live data drives availability checks, reorder triggers, and cost of goods sold without waiting for a period-end count. Cycle counting then validates the perpetual records and corrects any drift between system and shelf.
ERP Vendors with Strong Perpetual Inventory
Frequently Asked Questions
What is the difference between perpetual and periodic inventory?
Perpetual inventory updates records continuously with every transaction, giving real-time balances and valuation. Periodic inventory updates only at set intervals, relying on physical counts to determine cost of goods sold and ending inventory between those points. Perpetual systems provide far better real-time control but depend on disciplined transaction recording.
If inventory is perpetual, do I still need to count stock?
Yes. Perpetual records can drift from reality due to theft, damage, miscounts, or unrecorded movements. Cycle counting periodically verifies a subset of items against the system and corrects discrepancies. This keeps the perpetual records trustworthy without a full annual shutdown count.