Inventory Write-Offs: When and How to Write Off Stock

An inventory write-off removes inventory value when stock can no longer be sold or used at its recorded value. Common reasons include damage, spoilage, obsolescence, loss and unrecoverable shrinkage.

Write-off vs write-down

A write-off generally removes the remaining value of unusable inventory. A write-down reduces the recorded value when stock still has some recoverable value. Accounting treatment depends on jurisdiction and accounting policy, so confirm financial entries with a qualified accountant.

Operational steps before a write-off

1. Identify the exact SKU, quantity and location.
2. Confirm the physical condition.
3. Record the reason.
4. Separate unsellable stock from active inventory.
5. Adjust the inventory record with an auditable reason.
6. Preserve supporting evidence where required.
7. Review whether the cause is recurring.

Common reasons

• Damage
• Spoilage or expiration
• Obsolescence
• Theft or loss
• Unrecoverable count discrepancies
• Product recalls or quality failures

Write-offs vs shrinkage

Inventory shrinkage is the gap between recorded and physical inventory. A write-off is an accounting and inventory action taken when value should be removed. Investigate the reason before treating every unexplained discrepancy as a routine write-off.

How to reduce write-offs

Track aging stock, improve receiving, rotate perishables, tighten cycle counts and set replenishment rules that reduce excess. See inventory aging and excess inventory.

How Stash helps

Stash connects inventory records with purchasing, suppliers, locations, transfers, reporting and forecasting so teams can investigate why stock changed instead of relying on disconnected spreadsheets.

FAQ

Is damaged inventory always written off?

Not necessarily. If it can be repaired, returned to a supplier or sold at a lower value, a different treatment may be appropriate.

Should write-offs have reason codes?

Yes. Clear reasons make recurring operational problems easier to identify and audit.

Explore Stash inventory management

See how Stash inventory management software connects stock, purchasing, suppliers, forecasting and multiple locations, or review Stash pricing.