December 1, 2018      3 min read

There’s a lot to think about when managing a business. One of the most important activities a business can do is to optimise cashflow. There are numerous approaches to refining the operational cashflow in a business. One of the primary keys to a healthy cashflow is inventory management.

The following tips break down how you can improve cashflow through better inventory management techniques. By changing a few of your inefficient inventory tactics, you can free up more cash.

Use an inventory management system

It’s hard to imagine doing business without one, yet so many companies are still in the dark when it comes to online inventory management systems. If you want to gather data on your inventory stock and know what’s going on in real time, then an online inventory management system is necessary. They can highlight up-to-date inventory levels and show which products just aren’t moving off the shelves. Online inventory management can track items that move quickly and keep a history of shipping and sales patterns. This helps a business look at trends and make smarter buying decisions. Smarter buying can lead to healthier cashflow.

Take a closer look at your safety stock

Safety stock acts as a buffer. It protects a business if they run out of stock or if a shipment doesn’t arrive on time. It ensures that customers will still get the product delivered when they purchase it online. But safety stock takes up space in the warehouse and ties up cash. Take a closer look at your safety stock and analyse how often and how much of it gets used during the year. It’s always good to keep safety stock on hand, but you might be stocking too much and tying up cash.

Think again about buying in bulk

Bulk-buying is attractive to many warehouse owners as it allows them to secure some of their main materials or products at reduced, bulk prices. Suppliers often incentivise bulk buying because it gets warehouse owners to make big purchases and it moves their product quicker. However, for the warehouse owner, this might not be the best option for their overall cashflow. You might have over-purchased with the bulk order and now you have excess stock you can’t move and decreased cash. Take a step back from bulk buying if you want to get a handle on your cashflow.

Get rid of old stock

If stock has been sitting on your shelves for months on end, it’s time to get rid of it. There needs to be a policy in place for how long obsolete stock can sit on the shelf before it gets liquidated. Getting rid of obsolete stock on a regular basis will make room for more products that are selling. These products are the ones that are keeping your cashflow moving, so make space and encourage employees to routinely get rid of redundant stock.

Focus on the popular products

Put emphasis on popular products. If you keep investing time and money into products that aren’t selling, your cashflow will feel it.

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