Money Tips: Stock Control.
As an introduction last week we gave an overview of tips on controlling and monitoring the cash and assets of your business. This week we talk about one part of your cash flow STOCK.
Cash flow is exactly that, the cycle of money and assets from bank account to creditors > into stock or inventory > into accounts receivable or directly back into money in bank. With the intent of generating a % of gross profit on the way.
Stock
- (inventory) – that is Raw material or components (ready for use in production)
- Work in progress (stocks of unfinished goods in production)
- Finished goods (ready for resales)
- New stock (ready for resale).
- Consumables (fuel and stationary).
- Efficient and effective stock control helps you monitor the amount of stock you have making sure you have the right amount, right type at the right time
- STOCK TAKES: Do you have a current and accurate stock take? You can have too much money tied up in your bank account, your stock or you debtors which will slow the income generating cycle?
- STOCK TURNOVER AND QUALITY: Do you know your industry benchmark for stock turnover and how old is your stock?
- ORDERING AND RE ORDERING: Do you have Re-ordering levels.
- LEAD-TIME: How long does it take for your stock to come.
- EFFECT ON CASH LEVELS: Do you know what is on order and the value $ you will have to pay out of your bank account.
- SUPPLIERS: Negotiating the right deals.
- STOCK SECURITY: How much are you losing through theft and shoplifting, inefficient production, wastage and quality control.
By reviewing and controlling assets that you do have, you can make better decisions on future strategies and actions enabling better profits and easier cash flow.
