Inventory glossary
What is Inventory write-off?
Inventory write-off is the removal of stock from your books because it is no longer sellable or no longer worth its recorded value, for reasons like damage, theft, expiry, or obsolescence.
A write-off matters because it corrects your inventory value so your records match reality. If you never write off dead or damaged stock, your reports overstate how much inventory you actually have, and your profit numbers are wrong because you are still counting the cost of goods you can never sell.
Use write-offs after a stocktake or whenever you find stock that is broken, expired, or stolen. Record the loss as an expense, remove the units from on hand inventory, and check why it happened so you can avoid repeating it, whether that means better handling, tighter security, or buying less of a slow seller.
Formula
Example
A candle store finds 40 units of a discontinued scent damaged in storage. Each unit cost 6 dollars to make. The write-off is 40 x 6 = 240 dollars. The store removes these 40 units from on hand inventory and records a 240 dollar loss on its books.
Common mistakes
- Letting damaged or expired stock sit in inventory counts for months instead of writing it off right away.
- Writing off stock without recording why, so the same problem repeats with the next batch.
- Confusing a write-off with a markdown, when the stock is still sellable at a lower price and should not be removed from inventory.
Inventory write-off and SteadyShelf
SteadyShelf does not handle write-offs, but keeping a forecast and reorder quantities based on accurate stock levels means fewer slow sellers pile up and need writing off later.
SteadyShelf is launching on the Shopify App Store. Join early access to get the install link first.
Related terms
Dead stock · Obsolete inventory · Inventory shrinkage · Inventory adjustment · Cycle count
FAQ
Is a write-off the same as a markdown?
No. A markdown keeps the stock sellable at a lower price. A write-off removes stock from inventory entirely because it cannot be sold at any price.
When should a small store write off inventory?
As soon as you confirm the stock is damaged, expired, stolen, or permanently unsellable, usually after a physical count or stocktake finds the issue.
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