AI agents for business finance: what they can and can't do
What AI agents can do in bookkeeping, close, collections and compliance today, where a person must stay in charge, and how to judge a product.
The short answer
FIFO (first in, first out) means the stock that arrived first is sold first, so older units never sit behind fresh ones until they expire. In practice that means dating every delivery on arrival, loading new stock behind or under old stock, and checking expiry dates on a fixed weekly schedule; for perishables many shops follow the closely related rule of selling the earliest expiry date first.
Shelves are filled from the front because it is quicker. That is exactly how yoghurt, bread, juice and medicines end up expiring at the back of a fridge. FIFO is the discipline of reversing that habit. It is also one of the two cost formulas IAS 2 allows for valuing stock, so getting it right helps your accounts as well as your waste figures.
FIFO and FEFO: which to follow
- FIFO
- First in, first out: the oldest delivery sells first. IAS 2 (paragraph 27) describes it as assuming items purchased first are sold first.
- FEFO
- First expired, first out: the unit with the earliest expiry date sells first, even if it arrived later. Use it where deliveries can carry different expiry dates.
For most shops the two give the same order. Where a supplier sometimes delivers older batches, follow the expiry date, not the delivery date. For accounting, PwC's Nigeria summary (reviewed May 2026) notes FIFO is commonly used, average cost is also allowed, and LIFO is not permitted.
Setting up the system
- Check on arrival. Before signing the delivery note, check expiry dates. Refuse or note short-dated goods you did not agree to.
- Label every carton. Write the date received and the earliest expiry on the outside in marker, or use coloured stickers by week.
- Load from the back. New stock goes behind or under existing stock on shelves and in fridges; older units are pulled forward.
- One open pack at a time. In stores and kitchens, finish an open carton before opening the next.
- Store by expiry. In the stockroom, the earliest-dated cartons go nearest the door.
- Keep a short-date list. Anything expiring within your markdown window is listed and checked daily.
The weekly expiry check
Pick a quiet day and the same time each week. Go aisle by aisle with a simple sheet: item, batch or expiry date, quantity, action. Typical actions are pull forward, mark down, return to supplier if agreed, or remove. Remove expired items from sale immediately and record them as a stock loss.
| Days to expiry | Example action |
|---|---|
| More than 60 | Normal display, oldest at front |
| 30 to 60 | Pull forward, check reorder quantity is not too high |
| 7 to 30 | Mark down or bundle; ask supplier about swap |
| Under 7 | Final markdown or remove |
| Expired | Remove from sale, record, dispose properly |
These windows are examples; set your own by product. Bread needs days, tinned goods months.
Why it matters: cost and compliance
Example only. A minimart receives 40 cartons of yoghurt on Monday and another 40 on Thursday. If staff stack Thursday's delivery in front, Monday's cartons sit unsold. Losing 10 cartons a month at ₦9,000 cost each is ₦90,000 a month, over ₦1 million a year, from one line.
Expired goods are also a regulatory risk. In February 2026, Nairametrics reported that NAFDAC sealed 18 warehouses in Bida, Niger State, holding expired food and drinks valued at over ₦100 million, sealed supermarkets linked to the same company, and advised the public to check expiry dates and report suspicious products. For medicines, see pharmacy stock control: expiry, cold chain, reorder.
FIFO in your stock records
FIFO also decides which cost goes into cost of sales when prices change between deliveries. IAS 2 (paragraph 25) lets a business use FIFO or weighted average cost, but the same formula must be used for all stock of a similar nature and use, so pick one and keep it.
Example only. A shop buys 100 packs of juice at ₦500 on Monday and 100 at ₦560 on Thursday, then sells 150 packs.
| Method | Cost of the 150 sold | Value of 50 left |
|---|---|---|
| FIFO | 100 × ₦500 + 50 × ₦560 = ₦78,000 | 50 × ₦560 = ₦28,000 |
| Weighted average (₦106,000 ÷ 200 = ₦530) | 150 × ₦530 = ₦79,500 | 50 × ₦530 = ₦26,500 |
When prices are rising, FIFO leaves the newest, dearer costs in closing stock, so reported profit is slightly higher. Remember that the physical rotation on the shelf and the cost formula in the books are separate choices; the shelf should always follow the earliest expiry. For the full calculation see how to calculate cost of goods sold.
Making FIFO stick with staff
- Train every new staff member on loading from the back on day one.
- Make one person responsible for the weekly check and sign-off.
- Review stock losses by line monthly; a rising figure usually means rotation slipped.
- Order less, more often, for short-life lines (see reorder levels and safety stock).
- Record markdowns and disposals so you can see the cost of waste.
Where Pryme fits
Supermarkets, pharmacies and eateries are among the sectors that can join Spaces with a Pryme Business Account. The Business Account's Finance agent prepares reports, such as monthly stock-loss summaries from your records, for you to review and approve.
Questions people ask
What does FIFO mean in a shop?
First in, first out: sell the stock that arrived first before newer deliveries. Load new stock behind old stock so the oldest is always picked first.
What is the difference between FIFO and FEFO?
FIFO goes by delivery date; FEFO goes by expiry date. For perishables, follow the earliest expiry date if deliveries carry different dates.
How often should I check expiry dates?
At least weekly, on a fixed day, with a daily check of a short-date list for items close to expiry. Fast-perishing goods may need daily checks.
Can I sell expired products at a discount in Nigeria?
No. Remove expired food, drinks and medicines from sale. NAFDAC enforces against expired products, as its 2026 actions in Niger State showed.
Sources
- IFRS Foundation: IAS 2 Inventories (2024 issued text) · accessed Oct 2026
- PwC Worldwide Tax Summaries: Nigeria, corporate income determination (last reviewed 29 May 2026) · accessed Oct 2026
- Nairametrics: NAFDAC seals 18 warehouses in Niger over expired food products worth N100 million, 20 Feb 2026 · accessed Oct 2026
This article is general information, not financial, legal or tax advice. Products described are provided under the terms on this site and are subject to regulation and eligibility.