Is your stock control ruining your cash flow?

Is your stock control ruining your cash flow?

Is your stock control ruining your cash flow?

Staying on top of your inventory and stock control might not be the most exciting part of running a business – but it’s still one of the most important.

We’ve put together a few stock management tips to help you cut costs, smooth out sales, and free up cash for the parts of your business that really need it…

Don’t ignore the hidden costs

Being careless with your business’s inventory doesn’t just affect your basic cash flow. Whether your warehouse is running low or bursting at the seams, you could end up paying for:

  • Unnecessary delivery charges for items you don’t need – or express delivery charges for last-minute orders
  • Extra storage and insurance for excess stock
  • Additional working hours spent organising a bloated warehouse
  • Interest on the credit cards or overdrafts you use to pay for redundant inventory
  • Products that depreciate over time, become obsolete or just never selling
  • Compensation or discounts for your customers when there’s a shipping error or delay

With so many hidden costs to worry about (costs which can add up to as much as 30% of the cost of the stock itself!) it’s crucial to get a good grip on how you manage your stock control.

Work around your own stock cycle

If things are going well, your stock control and inventory should be in constant flux – just like your cash flow. Stock comes in, and it’s shipped out to where it’s needed almost immediately. But the ideal “Just-in-Time” method just isn’t realistic for every business.

Your suppliers might not be completely reliable, your sales might not be consistent, and you might not like the idea of paying for several deliveries each week. You need to find what works for your business. Don’t just focus on the items with the highest value – or even the ones that bring the most profit. Separate the fast-movers from the slow-movers and concentrate on moving higher volumes of the products that your customers need every week.

Those slow-moving items are sitting in your warehouse, tying up your cash and adding to your handling and storage fees. The fast-movers are bringing reliable and consistent injections of cash back into your business, even if the profit on each product is smaller.

If you’re sitting on especially slow or out-dated items, get rid of them entirely. You might be reluctant to let a product go at a low price, but if you’re paying 30% of its value just to keep it in stock, then knocking off 20% to get rid of it is a no-brainer.

Get stuck into your data before it’s too late

Whatever your industry, you need to be ready for a change. And if you’re not able to predict and adapt to these changes, you’re likely to end up with obsolete stock, a crowded warehouse and a cash flow that’s not looking healthy.

  • Instead of letting your inventory and your cash flow stagnate, pay more attention to your historic sales – and make adjustments before you start to suffer.
  • Keep an eye on your hottest sellers and see if any have been steadily dropping off for a few months. This will give you a good indication of changing trends and a need to reduce your orders to suit.
  • If your biggest competitor slashes their prices on a product that’s like yours, you might want to think about showing some restraint when you need to restock.

It sounds simple enough, but if you’re running a business that sells in high volumes – or you have a massive range of different products to worry about – putting your data to good use is easier said than done.

That’s when a cloud-based stock management system can help. You can track your current stock against your transactions, automate your purchase orders, and get unlimited access to your historic sales and inventory data – all on the move, and all integrated with your existing book-keeping systems.

Think outside the stock

It’s not enough to just keep your warehouses full of the right products. You need to take a good look at your entire supply chain, too. If your suppliers aren’t perfect, shop around. The more you can rely on your deliveries to arrive on time, the closer you can cut it when you’re trying to minimise the time you hold onto your inventory.

If you have workers placing your business’ orders, make sure they’re fully trained and aware of how a few poor ordering decisions can affect the whole business’s cash flow. And no matter how small your warehouse is, get it organised. Let the slow-moving items gather dust together at the back, and store only the fast-moving products close to the delivery and picking areas.

Don’t let your cash flow kill your business

Creating a perfect inventory management system won’t happen overnight. You need to be ready to break some bad habits, and it’ll take a little fine-tuning before things run completely smoothly.

But if you’re ready to find out how easy it can be to make positive changes to your business and stock control, one of our expert consultants is ready to chat.