Inventory
FEFO vs FIFO: which inventory method should you use?
Two simple rules for which stock to sell first — and when each one saves you money.
Key takeaways
- ▸ FIFO = sell oldest first (good for non-perishables).
- ▸ FEFO = sell nearest-expiry first (essential for dated goods).
- ▸ The wrong rule means write-offs or near-expiry goods reaching customers.
- ▸ Batch + expiry tracking applies FEFO for you automatically.
FIFO and FEFO sound like jargon, but they're just two common-sense rules for which stock leaves your shelf first. Picking the right one prevents both spoilage and confusion.
FIFO — First In, First Out
Sell the oldest stock first. Great for non-perishable goods where age, not expiry, matters — hardware, stationery, most general merchandise. It keeps stock moving and your valuation realistic.
FEFO — First Expiry, First Out
Sell whatever expires soonest first, regardless of when it arrived. Essential for food, pharma, cosmetics and anything dated. A newer batch with a closer expiry should go before an older batch that lasts longer — which is exactly where FIFO would fail you.
A quick example
You receive Batch A in January (expires December) and Batch B in March (expires June). Under FIFO you'd sell Batch A first — but Batch B expires sooner. FEFO correctly sells Batch B first, so nothing expires on your shelf.
Why it matters
- FEFO slashes write-offs from expired stock.
- FIFO keeps slow categories fresh and valuation honest.
- The wrong rule means money thrown away or customers sold near-expiry goods.
- Regulated goods (pharma, food) often require expiry-based movement.
Doing it without spreadsheets
Tracking batches and expiry by hand is where it breaks down. MGH Books lets you turn on batch and expiry per item and applies FEFO automatically at billing — so the right batch is picked for you, every time, and low-stock and near-expiry alerts warn you early.