Effective inventory management isn’t relegated to the warehouse; in one way or another, it’s everyone’s concern.
If you’re in the business of retail or wholesale, inventory is your biggest asset—and potentially your biggest liability. Knowing what you have in stock at any given time is essential to a healthy balance sheet and humming sales activity. But a healthy balance sheet involves more than simply assets outweighing liabilities; it leverages optimal working capital (current assets less current liabilities) to fund the company’s core operations, with the end goal of driving revenue and profit. Business owners—and accountants—must know what that optimal level is and how it may be affected by fluctuating sales, which are in turn driven by market and/or seasonal demand. Having the right kind of inventory in the right place to meet customer demand at the lowest possible cost to your business is everything. When inventory levels aren’t optimized, you’re in danger of losing sales—and customers— due to stockouts or spending too much to carry excess inventory and slow-moving items. Overstock also ties up much-needed cash flow, which can strain relationships with suppliers and even your bank. Effective inventory management isn’t relegated to the warehouse; in one way or another, it’s everyone’s concern.
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