How Effective Inventory Management can Increase Your Cash Flow

Efficient management of your inventory will go a long way towards optimizing your cash flow. An inventory management system that works well will efficiently organize and track your products, reducing the risk that you’ll run out of certain items and enabling you to deliver on your marketing promises.

Importance of Effective Stocking

When a customer orders an item you are offering for sale, they naturally expect to receive it promptly. Don’t miss out on sales because certain of your products are out of stock. When prospective customers can’t obtain the product they want, they will lose trust in your company and start going straight to your competition. A good inventory management system will accurately track sales and turnover and automatically reorder when product is low.

Disadvantages of Overstocking

To compensate for accuracy problems inherent in inefficient inventory management systems, businesses invariably tend to overstock. Overstocking has an adverse effect on cash flow as it ties up warehouse space and increases overhead costs. Many companies don’t even know how many thousands of dollars they have locked up in unsold product.

Advantages of Cloud-Based Inventory Management

A flow of accurate inventory data can be achieved by use of a cloud-based inventory management system that automatically connects to your sales and POS systems. Such a system eliminates the costs associated with overstocking and allows you to gauge the effectiveness of your marketing and sales campaigns. Even though a cloud-based system is generally more expensive than the outdated system it’s replacing, your inventory will be more streamlined, and you will retain more satisfied customers.

Effective inventory management is vital for the success of your business. If you are not handling your inventory in as optimum a way as possible, you are negatively impacting your cash flow by losing sales and tying up valuable funds in overstocked items. The growth of your company can also depend on access to adequate funding. Whatever type of financing you need, Liberty Commercial Capital is here to assist you.