What is periodic inventory?

Under a periodic system, the business counts everything at set intervals, often quarterly or annually, and derives what happened in between from the math: beginning inventory plus purchases minus ending inventory equals what was used or sold. Between counts, nobody actually knows the shelf quantity of anything. Periodic was the default before barcode scanning made continuous recording cheap, and it survives where movement volume is low and stakes are small: a small office supply closet, a seasonal operation, a business whose accountant only needs an inventory value at year-end. It demands almost no daily discipline, which is its entire appeal. The costs show up as blindness. You can't set a reorder point on a count you don't have, can't catch theft or miscounts until months later, and can't tell a customer whether the item is in stock without walking to the shelf. A variance discovered at the annual count has no trail back to a cause; the error happened sometime in the last twelve months, by someone, for some reason. Most growing operations migrate to perpetual records the first time a stockout costs them a job or a periodic count produces a write-off too large to explain. The migration is mostly workflow, not software: label the bins, scan the movements, count in cycles.