Inventory management software can improve cash flow

There's no point stocking items that won't sell. They gather dust, cost your business money to store and take up valuable space that could be used for something that will sell.

Good inventory management is the key to ensuring that your stock is converted into cash, rather than sitting idly in a shop or warehouse. So what do you need to know?

Assess regularly

The first step in effective inventory management is to regularly assess your stock to identify what is selling, and what isn't 

Most business software systems can produce a report that classifies how well your stock is selling, from the highest to the lowest. Once these goods have been identified it's up to you to decide whether to hold onto them.

And if you're getting rid of them, the more money you can make in doing so, the better.

Decision time

Just because stock isn't hugely popular and selling fast doesn't mean you need to offload it. It might be an item that sells regularly but slowly, and brings customers to your business specifically in search of that item or others like it.

But a vast majority of your 'dog stock' could probably go. The question is: How do you make money from items that are not selling?

Turning lead into gold

"There are a number of strategies you can use to get rid of useless stock, and most will get you some financial benefit," says David Simmonds from JIWA Financials.

"Some just involve getting the stock out of your warehouse or shop any old way, just to make room for something that will make you money."

Ways to move 'dog stock' out of your business include:

• selling it at a reduced price
• returning it to the supplier, possibly in exchange for a credit
• offering incentives to your sales team to sell these items
• liquidating the stock through disposal stores or bargain internet sites
• donating the items to someone.

The last and least attractive option is to put them in landfill. While this sounds like a waste of product, it is still a better option than paying to keep useless items in storage.

Cash flow = flexibility

"Having a store or a shed full of stuff that doesn't move is useless to a business," says David. "You need to keep the stock on the move, making you money, ensuring cash flow, which gives your business flexibility."

Cash flow allows you to:

• expand into new markets
• consider new premises
• buy products
• pay suppliers
• have a good, reliable reputation.

Talk to an inventory management software consultant in your area today and open up a world of possibilities for your business: