Why expiry losses usually start at the purchase desk
Most expired stock in a medical store was created weeks or months earlier, when a delivery was entered without the correct batch, a new box was placed in front of an old one, or nobody looked at what was nearing expiry. Keeping losses low comes down to four habits: record batch and expiry accurately when stock arrives, sell the earliest-expiring pack first, review near-expiry stock every month, and deal with returns and breakage promptly with proper records.
This guide is for owners and pharmacists who want those habits to run every day, whether they use software or a register. It does not cover the tax side of returns; that sits with your GST records and your accountant, and our pharmacy GST billing tips deal with it separately.
Recording batch and expiry when a delivery arrives
The purchase entry is the only point where batch information enters your records. If it is wrong here, every report that follows is wrong too. A good receiving routine takes a few extra minutes per invoice and saves hours at audit time.
- Match the physical packs against the distributor's invoice before entry, line by line, including the batch number printed on the strip or carton.
- Enter the batch number exactly as printed. A missing zero or a swapped letter creates a second, imaginary batch that never sells and later shows as a stock difference.
- Enter the expiry month and year, and check it against the pack rather than copying from the previous line of the invoice.
- Record the MRP for that batch, since a new batch of the same medicine can carry a different MRP.
- Flag short-dated receipts. Decide in advance how much remaining shelf life you will accept on arrival, and raise it with the distributor at delivery rather than months later.
- Shelve the new stock behind or beside the older stock so the earlier expiry is picked first.
If invoices arrive in the evening and are entered the next morning, keep the unentered cartons in one marked place so nobody sells from them before they exist in your stock.
First expiry, first out: selling the right strip
Many shops follow first in, first out without thinking about it. For medicines that is not quite enough. A distributor can send a later delivery whose batch expires before the one already on your shelf, so the safer rule is first expiry, first out (FEFO): always sell the pack that expires soonest.
FEFO only works if the shelf and the system agree. When billing software suggests the earliest-expiring batch but the staff member picks a newer strip from the front of the rack, the system reduces one batch while the shelf loses another. After a few weeks the batch-wise stock is wrong, even though the total count for that medicine still looks right.
- Arrange each rack so the earliest expiry sits at the front, and restock from the back.
- Train counter staff to check the expiry printed on the strip against the batch shown on screen for high-value items.
- When a customer asks for a particular batch, such as the same one they bought last month, bill that batch rather than the suggested one so the records stay correct.
- Keep one rule for loose strips cut from a box: they belong to the same batch as the box and should be billed as such.
A monthly near-expiry review that leaves time to act
An expiry list that only shows what has already expired is a record of losses, not a tool. The useful list looks ahead. Set aside time once a month, ideally in the first week, and work through stock in three windows. The exact windows depend on your distributors' return terms; the table below is a common pattern, not a rule.
| Expiring within | What to check | Typical action |
|---|---|---|
| 90 days | Items and quantities, and whether the distributor's return window is still open | Stop reordering slow sellers on the list; plan returns early |
| 60 days | Whether the quantity can realistically be sold in time | Move to the front of the rack and tell counter staff; sell only where the patient will finish the pack well before expiry |
| 30 days | Remaining quantity per batch | Prepare the return list and paperwork; follow your store rule for removing the stock from sale |
Agree a written store rule for exactly when an item marked with an expiry month comes off the saleable shelf, and apply it the same way every month. Consistency matters more than the particular choice, because it means nobody at the counter has to make the decision under pressure.
If the same items keep appearing on the near-expiry list, the problem is usually over-ordering rather than slow selling. Our guide to setting reorder levels for a medical store explains how to buy closer to actual demand.
Supplier returns, breakage and damaged packs
Returning expired or near-expiry stock
Each distributor has its own terms on expiry returns: how close to expiry they accept stock, whether they issue a credit note or replace goods, and what condition the packs must be in. Keep those terms on file. When you send stock back, record it as a purchase return against the specific batch and supplier, then track the credit note in the supplier ledger until it is adjusted against a payment. Unclaimed credits are a quiet loss many stores never notice.
Breakage and damage
A dropped bottle of syrup or a crushed carton is not a sale and not a return. Record it as a stock adjustment with a reason and the batch, approved by the owner or manager. Without this, broken stock turns up months later as an unexplained shortage.
Keeping unsaleable stock apart
Store expired, damaged and return-pending packs in a separate, clearly labelled box or shelf marked as not for sale, away from the counter. For disposal of expired medicines that cannot be returned, follow the guidance that applies in your state; check with your State Drugs Control office if you are unsure. Treat this as a pointer to ask the right authority, not as legal guidance.
Checks that catch batch errors before an inspection or audit
Small, regular checks find batch mistakes while they are still easy to fix. A full stock count once a year finds them when nobody remembers what happened.
- Weekly rack check: pick one rack, count each medicine batch by batch, and compare with the batch-wise stock in your records.
- Monthly expired-stock check: confirm that saleable stock shows zero quantity for any batch past its expiry.
- Negative stock report: a batch showing below zero means a sale was billed against the wrong batch, so trace it and correct it.
- Pending credits: list supplier returns still waiting for a credit note.
- Adjustments review: read through the month's breakage and stock adjustments, and question any that lack a reason.
Licensed pharmacies can be inspected by drug control authorities, and accurate batch-wise records make those visits easier. Check current record-keeping expectations with your State Drugs Control office.
Where pharmacy software helps with expiry, and where it cannot
Software makes this routine faster, but only if batch entry at purchase is done properly. MATROP's Pharmacy Management Software keeps batch-wise stock, records batch-wise purchase and sale, and raises near-expiry alerts at 30, 60 or 90 days, with a near-expiry report for the monthly review. Purchase returns and debit or credit notes are recorded against suppliers, and stock adjustments and stock verification support the rack checks above. Blocking sale of expired items and audit logs of edits are optional features.
No software can see which strip a staff member physically picks up, and none can correct a batch number typed wrongly at purchase. If your team is not ready to enter batches carefully at receiving, start with that habit on paper first; software will not fix it on its own. If you are comparing systems, our guide to choosing pharmacy software lists what to test in a demo.
Questions people ask
What is the difference between FEFO and FIFO in a medical store?
FIFO means selling whatever arrived first, while FEFO means selling whatever expires first. Because a later delivery can carry an earlier expiry date, FEFO is the safer rule for medicines.
How early should a pharmacy start acting on near-expiry stock?
Early enough to use your distributor's return window, which differs from one supplier to another. Many stores review stock at 90, 60 and 30 days before expiry so there is time to sell, return or set the item aside.
Do distributors take back expired medicines?
Many do, but the terms vary: some give a credit note, some replace stock, and most have conditions on timing and pack condition. Get each distributor's policy in writing and track pending credits in the supplier ledger.
Can software stop staff from billing an expired batch?
Many pharmacy systems can block an expired batch at billing; in MATROP's software this is an optional rule. It still helps to remove expired packs from the shelf, because the software only knows what was entered at purchase.
