Definition
Negative stock is a system quantity below zero, which happens when stock is recorded as leaving before its receipt has been recorded.
Negative stock meaning, causes and costing impact
You can’t physically hold minus five boxes, so negative stock always signals a recording problem: goods dispatched before the receipt was entered, a receipt posted to the wrong warehouse, or a counting or unit error. It also disrupts costing, because there’s no cost to take the outgoing units from, so stock value and cost of goods sold drift until it’s corrected.
Example: with nothing on hand, a branch dispatches 30 units on Monday, but the 40-unit receipt isn’t posted until Wednesday, so the system shows −30 for two days.
Most systems let you block it, or allow it with a warning and fix it later with a late receipt or a stock count.