What’re cash flow issues?
– Inability to meet financial obligations
– Difficulty paying bills
– Insufficient funds for expansion
– Lack of working capital
– Inability to take advantage of new opportunities
– Difficulty obtaining financing
– High levels of debt
– Insolvency
– Poor creditworthiness
– Inability to pay dividends to shareholders
– Difficulty retaining employees
– Reduced ability to invest in business.
Inventory management offers the surest long-term solution to working capital issues.
Cash flow is a problem you want to solve BEFORE it has occurred.
The most effective way is better inventory management:
1️⃣ 𝐑𝐞𝐝𝐮𝐜𝐢𝐧𝐠 𝐞𝐱𝐜𝐞𝐬𝐬 𝐢𝐧𝐯𝐞𝐧𝐭𝐨𝐫𝐲:
Maintaining lower levels of inventory can help free up cash that is tied up in excess stock. By reducing excess inventory, a business can save money on storage costs and potentially reduce the risk of inventory becoming obsolete.
2️⃣ 𝐈𝐦𝐩𝐫𝐨𝐯𝐢𝐧𝐠 𝐢𝐧𝐯𝐞𝐧𝐭𝐨𝐫𝐲 𝐭𝐮𝐫𝐧𝐨𝐯𝐞𝐫:
By effectively managing inventory and ensuring that stock is moving through the business quickly, a company can improve its inventory turnover ratio, which can help generate more cash for the business.
3️⃣ 𝐑𝐞𝐝𝐮𝐜𝐢𝐧𝐠 𝐬𝐭𝐨𝐜𝐤-𝐨𝐮𝐭𝐬:
Avoiding stock-outs can help a business maintain customer satisfaction and avoid lost sales, which can help improve cash flow.
4️⃣ 𝐑𝐞𝐝𝐮𝐜𝐢𝐧𝐠 𝐜𝐚𝐫𝐫𝐲𝐢𝐧𝐠 𝐜𝐨𝐬𝐭𝐬:
Effective inventory management can help reduce the cost of storing and insuring inventory, which can free up cash that can be used elsewhere in the business.
5️⃣ 𝐈𝐦𝐩𝐫𝐨𝐯𝐢𝐧𝐠 𝐒𝐮𝐩𝐩𝐥𝐲 𝐭𝐨 𝐛𝐞 𝐢𝐧 𝐥𝐢𝐧𝐞 𝐰𝐢𝐭𝐡 𝐝𝐞𝐦𝐚𝐧𝐝:
Accurately understanding what your customers need can help a business ensure that it has the right level of inventory on hand to meet customer demand, which can help improve cash flow by reducing excess inventory and stock-outs.