How Inventory Management Affects Cash Flow

Cash flow is key to the success of every business.

Poor inventory management can negatively affect your cash flow, the overall productivity of your business, and your bottom line. But if you’re a growing company, you may not realise just how much a solid inventory management system can improve your cash flow.

How cloud inventory systems help your business cash flow

One of the main reasons businesses that hold inventory have poor cash flow is poor inventory management. Poorly managed inventory can leave your business cash-poor and unable to operate as usual.

An inefficient inventory management strategy can lead to over-ordering stock, which ends up expiring or being in excess of the actual customer demand you have. This leaves your business’s cash tied up in unsellable stock.

Businesses can avoid situations like this by investing in an inventory management system.

This enables you to track previous sales patterns to help you decide which products to stock up on, and also gives you visibility on any products that will see a reduction in sales throughout the year. When it comes time to order, managers have the data to make informed and accurate inventory decisions.

On the other hand, poor inventory management can lead to the underordering of stock. This happens when you haven’t predicted a surge in sales of particular products and therefore can’t meet demand.

These wasted opportunities deprive your business of potential revenue and force business owners to find other ways to make sales.

PencilPay and inventory management

PencilPay integrates with many inventory management systems, including Cin7 Core and Unleashed, as well as all the major accounting and credit platforms. The integrations mean you don’t need to waste time manually transferring data from system to system.

Once a new customer is approved, their records are auto-populated into your accounting and inventory systems, saving you hours.

Get in touch or book in a demo to find out more.