Every company must perform a physical inventory of its warehouse stocks at least once in a fiscal year to balance the stock account. In addition to cycle counting, you can also use the periodic and continuous inventory procedures. You can perform a periodic inventory in the form of a complete inventory count or as a sample-based inventory count. In the SAP R/3 System, the term physical inventory refers to the functions used for performing the physical inventory. You can valuate stocks for balance sheet purposes based on the data counted. You can find these functions under the node Balance Sheet Valuation in the SAP R/3 System.

During the periodic inventory (complete inventory count), all of the company’s stocks are physically counted on the balance sheet key date. You must count every material. The whole warehouse must be blocked at an organizational level for material movements during the count.

On the other hand, all the stock in the company will be physically included in the continuous inventory (complete inventory count) throughout the year. Every material must be counted here as well. In the same way, the stock of materials for goods movements must be blocked during the counting of stock. The timing of the count throughout the year is freely definable and is only displayed at an organizational level.