Azets’ five cashflow management tips for SMEs: Turn over new leaf on stock and inventory
Be ruthless with stock management to improve cashflow – that is the message for SMEs in Yorkshire from international accountancy and business advisory group Azets.
Matthew Grant, Yorkshire head of accountancy and business advisory, urged businesses to think more strategically to tighten up their stock and inventory processes.
He has offered five key tips for SMEs in the county:
1. Utilise inventory management software: This is a critical tool to managing existing and new stock in real time to ensure that there is no overordering, to prevent cash being tied up in stock unnecessarily. Conversely, setting minimum stockholding thresholds will guard against popular lines of stock falling too low.
2. Make stock with high margin/high stock turn visual to sales team so they know what to sell: Communication is key. Inventory management software can flag up the products making the most money – ensuring the focus is on products with the greatest margin.
3. Do regular physical stocktakes/random stock checks: Things can go wrong even with the best systems in the world. Holding mini-audits and periodic checks is good practice. For large suppliers it needn’t mean disrupting operations. Spot checks can be carried out by crosschecking samples from shelves with the digital inventory and vice-a-versa.
4. Promise delivery within a few days: Keeping the delivery lead time as short as possible is obviously great customer service, but it also costs money to hold stock in warehouses or storage so the less time that it is held the better. Minimising the stock days and maximising stock turnover is absolutely key.
5. Calculate stock turn per item to identify slow-moving stock and decide if this should be discontinued: Software can show how long items have been held in stock. Consider whether those items taking too long to sell are worth stocking at all or if you need to hold as many as you are. Discounting slow-moving/obsolete stock may be an option.
Matthew Grant, Partner and Head of Accounts and Business Advisory for Azets in Yorkshire. . Azets is a UK top 10 accountancy and business advisory firm. It has 334 staff in Yorkshire at offices in Bradford, Leeds and York.
Matthew, who is based in Azets’ Leeds office, said: “Stock and inventory management can be complicated but being absolutely ruthless with stock days, margins and warehousing is absolutely key to preventing an unnecessary drain on cashflow.
“Clearly, it can also support increased sales if there is a laser-like focus on the inventory data and customers see an enhanced level of service.
“Regular reviews can also lead to more informed business decisions and the identification of potential growth opportunities and shed light on possible issues.”
Azets has three offices in Yorkshire, in Leeds, Bradford and York, where it employs 335 people. It is one of the top 10 firms of accountants and business advisors in the UK.
For more information about Azets, visit www.azets.co.uk