Create Cash Flow With Your Old Inventory

Two of the biggest dreads of any business owner are too little inventory and too much inventory. As bad as both these situations can be for your business, too much inventory is definitely the bigger dragon to look out for. By excessive inventory we do not mean an extra bulk of fast-moving merchandise that is likely to sell in a couple of months, but what we are talking about is those slow-moving products that have been lying on your top shelves for months, and refuse to budge.

Old inventory spells disaster for your business for two reasons- the first one is that it keeps your cash flow strapped, hence reducing your productivity; and the second is that it requires you to spend more money on its maintenance and the probable risks involved. To cut a long story short, the bottom line is that old inventory is best gotten rid of. When it comes to generating cash flow from an old inventory, a common mistake made by most business owners is not being willing to offer a significant discount on the products.

However, when you think of it logically, this is the simplest and most efficient way of clearing your inventory.
The benefits that you get from putting your slow-moving products on sale are as follows-

• You convert a liability into cash, and you can use this cash on a more productive venture, like say investing on more fast-moving merchandise. 
• This is a great way to draw prospective customers to your business, and while they shop for the discounted items, chances are that they shall also add a few of your best selling products into their shopping carts. 

The only deterrent to this approach, from the business owner’s point of view, could be the perceived loss of offering a huge discount on any of his merchandise. To understand how this is not actually a loss, consider this simple example- a product costs you $100, and you sell it for $200. In order to clear your inventory, you sell it at a 50% discount. If asked how much profit they generated from this deal, most business owners would say they ended up with zero. However, when you think of it, what you are getting is actually a $100 gain, since the cash and space that you have got from a product that was giving you zero cash, can now be used for a more profitable item.

McLane Logistics Technology provides customized Inventory Management Software system for businesses to effectively manage their inventory functions. You can contact them at 4001 Central Pointe Parkway, Temple, TX 76504 or call them at 1-800-989-7568.