What is FIFO inventory management?

FIFO in one sentence

First-in, first-out (FIFO) means the stock you bought first is the stock you sell first.

If you received 100 units of a product in January and another 100 in March, FIFO assumes the January units leave the shelf before the March units.

Why it matters

• Fresher stock. Older batches sell before they expire or go out of date.
• Honest profit. Your cost of sales uses what you actually paid for each batch, not an average guess.
• Cleaner audits. Every unit sold can be traced back to the batch it came from.

A quick example

You buy 50 bottles at Rs. 200 and later 50 more at Rs. 240. You sell 60 bottles.

With FIFO, the cost of those 60 is 50 × 200 plus 10 × 240, which comes to Rs. 12,400. The 40 bottles left on the shelf are valued at the newer price.

Doing FIFO by hand is hard

Tracking batches on paper or in spreadsheets breaks down quickly once you have hundreds of products, several suppliers and more than one branch.

A POS with built-in batch tracking does it automatically. Every sale picks the oldest batch, and every report shows the real cost.

How Smart POS handles it

Smart POS records each purchase as a batch, follows FIFO on every sale, and shows stock valuation and profit per batch. It's especially useful for pharmacies, groceries and any business with expiry dates.

Want to see it in action? Book a demo.