Inventory Write-Off

Write-offs reduce gross profit in the period recorded. A rising write-off total points to forecasting, handling, or shelf-life problems.

What is the difference between an inventory write-off and a write-down?

A write-off removes the full value of inventory that has no remaining value. A write-down reduces the recorded value of inventory that is still sellable but worth less than its cost, such as items that will need deep discounts.

• ShrinkageInventory lost to theft, damage, miscounts, or administrative errors, measured as the gap between recorded and actual stock.
• Dead StockInventory that has not sold for a long period and is unlikely to sell at full price.
• Inventory ReconciliationThe process of comparing inventory quantities across systems such as the WMS, ecommerce platform, marketplaces, and accounting ledger, and against physical counts, then investigating and correcting variances.
• Cost of Goods SoldThe direct cost of the inventory a business sold during a period, typically including product cost, inbound freight, duties, and other landed costs, but not outbound shipping or marketing.