Inventory ageing and working-capital optimization

We age the group's inventory by product, location and purchase date and value each band at what it can recover. From that we build the release plan for slow stock and set the buying levels and reorder rules that keep the position from building again.

The work answers the cash question first. In many trading groups inventory is the largest block of working capital, and storage keeps costing for every month it sits.

• An inventory ageing schedule by product, location and age band, valued at cost and at recoverable value.
• A slow-stock release plan with discount, channel and return-to-supplier options for each line.
• A reorder policy by product class, with service targets, lead times and safety levels.
• A working-capital release model showing cash freed month by month under each option.
• A board paper that sets provisioning, storage cost and cash effect side by side.

• Your board reads the share of stock value in each age band, from recent to oldest.
• Days of stock cover are set per product class, so buying follows cover instead of habit.
• Cash released from slow stock is reported against the plan every month.
• Storage cost per unit held is tracked, so every idle unit has a price.
• Buyers order against forecasts whose accuracy is measured on the top product lines.

Buyers order against optimistic sales plans, stock that misses its season loses value, and the ledger carries it at cost until the year-end review. By then the group has paid for storage and financing on goods that will sell at a discount, if they sell.

• Stock cover in months has lengthened for several quarters while sales are flat.
• A third of product lines have not sold in ninety days, and no one has a list.
• Storage charges are rising faster than turnover.
• A lender or credit insurer has asked for an inventory ageing report that does not exist.
• Buying is done by feel, and each buyer has a different reorder habit.

Chief executives and finance directors of importers, distributors, retailers and manufacturers carrying seasonal or fashion-sensitive stock, and boards whose lenders have begun to ask about inventory quality.

Qasim Abbas has answered for treasury above USD 50M at group level, so he treats inventory as the cash it represents. Your review asks of every slow line how much money it holds and when that money will be back.

We work from the inventory records and the ledger the group already runs, including Xero, QuickBooks, Zoho Books and NetSuite. See how fees work.

How do you decide what stock is worth?

We use recent sale prices, channel options and supplier return terms for each line, and we list the assumptions behind each value.

Can this help with a lender covenant?

Yes. The ageing and release model gives the lender a documented view of stock quality.

Bring your latest stock listing to a private briefing with the Managing Partner. We cut the ageing for your board there and show what the cash position is.