As a result of bookkeeping errors, damaged goods, theft, or other discrepancies, sometimes the amount of inventory in stock is less than the amount of inventory listed in a company's records. This is known as inventory shrinkage: a difference between in-stock and recorded inventory.

Even mild inventory shrinkage can have a substantial impact on your business. A discrepancy between recorded and actual inventory counts can mean lost revenue. Inventory shrinkage can also indicate control issues, cashier negligence, or other issues that inhibit 100% of products from reaching a point of purchase.