Recording Damaged, Stolen, Sample and Loaned Stock

Damaged, stolen, sample and loaned stock should never leave your inventory on a sales delivery note. Give every goods-out its own type — damage, theft, sample, loan, transfer or sale — and your stock count stays right while your reports finally show where the missing quantity actually went.

Most warehouse teams know the pain: the cycle count is short, a pallet was crushed last week, a sales rep took three units to a trade show, and a contractor still has the demo unit. If all of that is booked as “sales” or quietly corrected with a stock adjustment, the numbers balance but nobody learns anything. This guide explains how to record each kind of non-sale stock movement properly, who should record and approve it, and how the Avadar Trade edition handles it plan by plan.

Why a stock write-off is not a sale

Many small and mid-sized businesses run with a single outbound document. Whatever leaves the shelf goes through it, sometimes against a catch-all “miscellaneous customer”. That shortcut causes three problems that grow every month:

• Sales figures are inflated. Units that never earned revenue appear in sales velocity, distort reorder decisions and make a slow product look healthier than it is.
• Shrinkage stays invisible. Management cannot tell how much stock is lost to poor packaging, careless handling or uncontrolled access, because those losses hide inside other numbers.
• Returnable items are forgotten. A loan or a demo unit booked as a sale has no open status, so nothing reminds anyone to get it back.

Separating goods-out types is not bureaucracy. It is the simplest way to make every stock reduction answer the question “why?” — and to add those answers up at the end of the month.

Types of goods-out every warehouse should distinguish

The labels vary between companies, but the logic is the same: the reason for the movement must be readable from the document itself, not from someone’s memory.

How to record damaged stock in inventory software, step by step

1. Quarantine it physically. Pull the damaged unit off the pickable shelf straight away so it cannot be shipped by mistake.
2. Identify it exactly. Scan the barcode or QR code with a phone or scanner so you know the precise item, serial number or batch. Typing codes from memory is where the next discrepancy starts.
3. Document the cause. One plain sentence is enough — “forklift tine pierced carton during putaway” or “roof leak above aisle C”. Over a few months these notes reveal patterns.
4. Book a damage goods-out. Use the damage type instead of a sales note, so on-hand stock drops but sales figures stay clean.
5. Decide what happens next. If the item can be repaired or sold as seconds, handle that as a separate, documented flow. Nothing that left good stock should drift back onto a shelf without a document.

Keep one distinction in mind: goods that arrive damaged from a supplier are a receiving issue, not warehouse damage. Check and reject them at goods-in so they never enter sellable stock. Damage that happens inside your building is a different cost, and seeing it separately tells you whether the problem is packaging, racking or rushing.

Recording theft and inventory shrinkage without erasing the trail

The temptation after a short count is always the same: one anonymous adjustment and the problem disappears. The figure is fixed, but the real question — where did it go and how? — is buried. When shortfalls caused by unauthorised removal or loss are booked as theft, you can later see whether they cluster around a particular warehouse, product group or shift.

For serialised or batch-tracked items, searching the serial or batch and opening the stock card (kardex) shows the last recorded movement: which document and which warehouse the item was last seen in. In Avadar every change in the system is logged, so an awkward document cannot be silently rewritten.

• Restrict who may book theft-type exits to a few defined roles rather than every operator.
• Recording it in software does not replace your disciplinary or legal process. It simply makes sure the warehouse data behind that process is complete and trustworthy.

Sample and loaned stock: items that are meant to come back

Samples come in two kinds. Some are consumed — a unit opened and destroyed in a customer’s lab test. Others return after an exhibition or a product demo. Loans, on the other hand, should always come back: a tool lent to a contractor, a spare part handed temporarily to another site.

1. At goods-out, book the sample or loan type and name the recipient.
2. Get the receiver’s signature on the delivery note, so “I never received it” is never a debate.
3. When the item returns, book it back into the same warehouse with a goods-in document and inspect it first. If it came back damaged, follow the damage flow.
4. Review the list of open loans weekly and chase anything overdue.

For tools and equipment that circulate constantly between staff, our guide on tool and asset lending goes deeper.

Who records, who approves

Even perfect goods-out types are worthless if anyone can issue anything. A sensible split of duties looks like this:

• Warehouse operator records the movement; in Avadar each operator sees only their own warehouse.
• Supervisor reviews and follows up non-sale exits.
• Accountant automatically receives the document number and stays informed; the financial treatment of each exit remains their decision in the accounting system.
• Auditor has a read-only role: sees every document and report but cannot change anything — ideal for an internal auditor or an external finance adviser.

If sensitive exits must never happen on one person’s say-so, the Elite plan of Avadar Trade offers an optional multi-step approval flow: a stock request is approved by the accountant, supervisor and project manager before the issue note is created, stock decreases only after final approval, and each step carries a digital signature. We cover that chain in detail in goods-exit approval workflow; this article focuses on the exit type itself.

Goods-out types in Avadar Trade: which plan includes what

You can use Avadar as a cloud service or install it on a company server, and data stays viewable even when the internet drops. If your stock history lives in spreadsheets or an older program, the P-Soft team migrates that prior data for you; how far that goes is set out in the contract according to your plan.

Monthly checklist for non-sale stock movements

• Total damage exits by warehouse and product group — does one aisle or rack keep appearing?
• Compare theft and loss exits with the result of the latest stocktake.
• Match samples sent against prospects who later bought, so you know what that marketing cost achieved.
• Chase every loan that has not returned, by borrower name.
• Look for non-sale movements wrongly booked as sales — the most common training gap.
• Re-check who can book sensitive exit types; people change roles, permissions tend to stay.

Frequently Asked Questions

How does a damage write-off differ from a sale?

Both reduce stock. A sale means goods reached a customer in exchange for payment; a damage exit means the goods were destroyed or made unusable. Keeping them apart protects your sales figures and makes handling losses visible.

Is booking theft in inventory software enough?

No. It makes the warehouse record complete and traceable, but any disciplinary or legal follow-up is a separate process your company runs on its own terms.

How do I record a loaned item when it comes back?

Book a goods-in into the same warehouse. Inspect it first; if it returned damaged, record that with the damage type.

Which Avadar Trade plan has specialised goods-out types?

All three plans — Start, Pro and Elite. The auditor role starts at Pro, and multi-step approval with digital signatures is Elite only.

Can the auditor role edit documents?

No. The auditor role is read-only: it can view all documents and reports but cannot create or change anything.

Want to see damage, theft, sample and loan exits handled in a real workflow? Explore the Avadar Trade edition and request a demo with the P-Soft team.

Further reading

• What Is Warehouse Management Software & Why Every Business Needs It
• The Best Warehouse Management Software for Your Business: A Guide to Choosing and Comparing (2026)
• What Is Stocktaking? A Complete Practical Guide

Complete guide: warehouse management software