Expired stock is inventory that's past the date on its label, its use-by, expiry or best-by date, so it can't be sold, or shouldn't be, and usually has to be written off. For a maker it covers ingredients past their date on your shelves as well as finished products past theirs, and its cost is what you paid for it: the money is already spent, and the write-off makes it show. Expired stock is mostly avoidable. It comes from using newer stock before older, buying more than you use before the date, and not seeing what's close to its date until it's too late. In the example below, a small kitchen writes off $72.66 of expired stock in October, and has $186 more that will expire in the next 30 days unless it's used or sold first. Below is what the dates mean, what expired stock costs, how to record it, what to do with it, and how to keep it from happening.
The short version
- Expired stock is stock past the date on its label, ingredients or finished goods.
- Its cost is what you paid; writing it off records the loss, it doesn't create it.
- Use-by and expiry dates are about safety for some foods; best-by dates are about quality.
- Record each write-off with its reason, item and cost, so you can see the pattern.
- Act on stock that's expiring, not only stock that's expired: there's still time to use it.
- Prevention is first-expired-first-out, buying to your real use, and an early warning.
- TaroStack warns before a lot expires, sends the oldest out first, and costs every write-off. More below.
What the dates mean
For food in the US, federal law doesn't require a date on most packaged products: except for infant formula, quality-based date labels aren't required by federal law or regulation, and FDA supports "Best if Used By" as the phrase for when a product is at its best flavor and quality (FDA). Infant formula carries a "Use by" date set from testing (21 CFR 107.20). States can have rules of their own for some foods.
| Date on the label | What it usually means | Past the date |
|---|---|---|
| Use by, expires | The end of the period the maker stands behind | Don't sell it; for some products it's a safety date |
| Best if used by, best before | Peak flavor and quality | Quality drops; makers usually don't sell it |
| Sell by | A date for the store's rotation | Not a safety date; the buyer still has time |
| An ingredient's date | The supplier's use-by or best-by | Don't use it in what you make |
Whatever the law allows, the practical rule for a maker is simple: stock past its date doesn't go out, and it doesn't go into a batch. How to write the date on your own label is in best by date format.
What expired stock costs
Windward Roots, the made-up taro business I use in these examples, checks its dates at the end of October:
| Expired in October | Lot | Date | Quantity | Cost |
|---|---|---|---|---|
| Coconut cream | CC-0912 | Oct 3 | 4 cartons at $4.80 | $19.20 |
| Taro chips, 5 oz | TC-260715-A | Oct 14 | 18 bags at $2.10 | $37.80 |
| Guava jam, 8 oz | GJ-260410 | Oct 20 | 3 jars at $5.22 | $15.66 |
| Total | $72.66 |
That's $72.66 of cost, and the chips and jam also lost the sales they'd have made: about $83 more at wholesale prices. Over a year, a kitchen writing off this much every month loses about $870 of stock it paid for.
Expiring is the list that matters
| Expiring in the next 30 days | Lot | Date | Quantity | Cost | What to do |
|---|---|---|---|---|---|
| Taro chips, 5 oz | TC-260801-B | Nov 2 | 40 bags | $84.00 | Saturday market, at a sampler price |
| Butter | BU-1002 | Nov 8 | 6 kg | $54.00 | This week's loaves use it first |
| Coconut cream | CC-1003 | Nov 15 | 10 cartons | $48.00 | Front of the shelf; next two batches |
| Total | $186.00 |
The expired list is a record of money already lost. The expiring list is money you can still save, which is why it's the one to look at every week. How long a buyer expects a product to have left when it arrives is in minimum remaining shelf life.
Recording the write-off
Take expired stock off your inventory at its cost, with the reason "expired", the item, the lot and the date. In your books, the cost moves from inventory to an expense, usually in cost of goods sold or a separate waste line, as your accountant prefers. A write-off with a reason is what lets you see, after three months, that it's always the chips, or always the second site. How write-downs and write-offs are entered is in what is an inventory write-down.
What to do with it
| Stock | Options |
|---|---|
| Expired food or ingredients | Discard it; record it with its reason and cost |
| Delivered already short-dated | Refuse it at receiving, or ask the supplier for a credit |
| Expiring soon | Use it first in production, sell it at a market or as a sampler, or offer it to staff |
| Near-dated finished goods for a customer with a shelf-life rule | Send it to a customer or channel that can take the shorter date |
Food that's within its date can often be donated; food past a use-by date shouldn't be. Check your local rules before you donate.
How to keep it from happening
| Cause | Fix |
|---|---|
| Newer stock used before older | First-expired-first-out: always pick the lot with the earliest date |
| Buying more than you use before the date | Order quantities from real use, not from the supplier's minimum alone |
| Not seeing what's close to its date | A weekly expiring list, or an alert |
| Short-dated deliveries | A minimum days-left check at receiving |
| Slow products | Smaller batches, or drop them |
How first-expired-first-out differs from first-in-first-out is in FEFO vs FIFO.
Where this stops working
A spreadsheet of dates works when someone updates it. Then a delivery goes on the shelf without its date typed in, the butter is used from the new case because it's in front, and the weekly check is skipped in a busy week. The expired list is found at month end, by which time it's a write-off, not a decision.
How TaroStack does it
TaroStack keeps every lot's date in front of you, and acts on it before the date passes.
Every lot has its date. Ingredients are received with their lot and use-by date, scanned from a supplier's GS1-128 case label where there is one, and every batch you make goes into a lot with its own date. Stock is picked first-expired-first-out by default, so the butter used is the butter that expires first.
Warned before, not after. Lots expiring soon raise an alert, in the app and by email, one per problem or one summary a day. The expiry forecast shows what will expire before it's used or sold, and what it costs, while there's still time to do something about it. Customers can carry their own rule for days left on delivery, and a lot too short for that customer is flagged.
And the write-off is counted. Expired stock comes off with its reason, lot by lot, and the losses report shows what expired stock cost, by item, reason and site, month by month, so the pattern is visible. Planning, on Standard, checks shelf life before a batch is made.
| The job | Spreadsheet | In TaroStack |
|---|---|---|
| Which lot to use first | Whatever's in front | First-expired-first-out |
| What's about to expire | The weekly check, if it happens | Alerts and the expiry forecast |
| What expired stock cost | Added up at month end | The losses report, by reason and item |
| Short-dated deliveries | Noticed later | Dates captured at receiving |
Lots, expiry dates, alerts, the expiry forecast and the losses report are on every plan, from $49 a month; planning is on Standard at $99. The first 30 days are free, with no credit card. If you'd like a hand setting up, ask, and we'll do it with you.