Perpetual System vs. Periodic System

The perpetual system and periodic system are two methods for tracking inventory. In a perpetual system, inventory levels are updated in real-time with each sale or purchase, providing instant access to stock information. This helps businesses manage inventory more effectively. In contrast, a periodic system updates inventory records at specific intervals, such as monthly or quarterly. During periods between updates, businesses must rely on estimates, which can lead to inaccuracies. While the perpetual system offers detailed oversight, the periodic system is simpler and may be easier for smaller businesses to manage.