Phantom inventory is that inventory that does not exist in the business for utilization. The audit process can be a long process specifically when you have a lot of inventory. For better results, you can perform inventory audits frequently. The inventory cycle count is very similar to the audit procedure. It is a perpetual inventory count however, for this process accuracy is very important. The best way to get rid of phantom inventory is to keep track of inventory through automated software such as inventory management software.