by Anita Comisky
Yes, it is that time of year when the holidays are rapidly approaching which means the year is ending soon. Most business owners are focused on trying to finish the current year with sales and net income numbers close to their goals. Not much attention or time is spent on inventory numbers and levels. It is very important to spend a little time to end the year with the appropriate inventory.
We recommend to all of our clients to take 2 hours to do the following:
- Run a balance sheet as of the current day
- Run a detailed inventory report
- Run a sales by product report year to date
Once you have those 3 reports in front of you start “diving” into the numbers and ask yourself the following questions:
- Is more cash wrapped up in my inventory than I would like?
- Are there products that just are not moving?
- What is the breakdown of my inventory? Are the majority of products left that sell well or are there a lot of dollars tied up in slow-moving products?
It is hard for all of us to eliminate those slow-moving products. But this is the time of year to put those on sale and turn that inventory into cash. Product mix must be evaluated so that your inventory is comprised of products that sell and not those that collect dust on the warehouse shelf. Do not wait to put it on sale, do it now to create the cash.
It is wise to start the year with cash in the bank to ride out the slower months in the first quarter. By discounting slow moving inventory you are generating dollars to meet your cash needs in January and February..