What is Perpetual Inventory?

Perpetual inventory is an accounting and operational method where inventory records are updated continuously and in real time as transactions occur. Every purchase, sale, return, transfer, and adjustment is immediately reflected in the system, providing an always-current view of stock levels. This contrasts with periodic inventory systems, which only update stock counts at scheduled intervals such as monthly or quarterly physical counts.

Why It Matters

In multichannel commerce, where inventory is shared across multiple sales channels, warehouses, and fulfillment centers, perpetual inventory is not optional—it is essential. Without real-time tracking, you cannot accurately display available stock to customers, prevent overselling, or make informed purchasing decisions. A periodic system that updates counts weekly or monthly simply cannot keep up with the velocity of modern e-commerce operations.

Perpetual inventory also provides continuous data for financial reporting, demand forecasting, and inventory valuation. Rather than waiting for a physical count to reconcile your books, you have an up-to-date picture of your inventory asset at all times.

How It Works

• Transaction Recording: Every inventory-affecting event is recorded immediately. A sale decrements stock, a purchase order receipt increments stock, a return adds units back, and a transfer moves quantities between locations.
• Real-Time Sync: In multichannel setups, perpetual inventory systems sync stock counts across all connected channels within seconds of a transaction. When a unit sells on Amazon, the available count on Shopify and eBay decreases accordingly.
• Cost Tracking: Perpetual systems maintain running calculations of inventory value using methods like FIFO, LIFO, or weighted average cost. Each transaction updates not just the quantity but also the cost basis of remaining inventory.
• Cycle Counting: Even with perpetual tracking, periodic physical verification (cycle counts) is necessary to catch discrepancies from theft, damage, or system errors. Perpetual systems make cycle counting more efficient by flagging discrepancies between system counts and physical counts.

How Nventory Helps

Nventory operates as a perpetual inventory system by default, updating stock levels across all connected channels and warehouses in real time as orders are placed, fulfilled, returned, or adjusted. The system maintains a complete audit trail of every inventory movement, making it easy to trace discrepancies and maintain accurate financial records without relying on disruptive full physical counts.