How to convert slow-moving and excess inventory into cash

Successful management of inventory is the key to a successful business setup. Businesses do all they can to optimise their inventory management and make it as efficient and cost-effective as possible. However, there are times when even the most modern and well-thought-out systems struggle.

One of the most common problems plaguing inventories worldwide is excess or slow-moving goods. This phenomenon usually occurs at the start of the year or at the end of the festive season, when there is a demand for new products in the market. Ideally, products should be sold within 90-120 days, and if they aren’t, they are just costing you money and vital shelf space.

This is a problem that every retailer faces at some point, despite heavy research and accurate forecasting of sales. Things rarely go according to plan, and therefore you should always have a plan to clear excess or slow-moving inventory.

Organise a sale

This is the most obvious and effective way of clearing old stock. It is hard for the customer to resist a discount. Begin with 10% off on goods lying unsold for more than 90 days. If the product remains unsold for longer, consider increasing the discount. It is normal for businesses to offer discounts ranging from 35%-70% on goods that have remained unsold for more than 120 days.

Try something new

Sometimes, re-positioning a product differently or using various marketing approaches can help faster liquidation of inventory. For example, a product of daily use of a certain brand may have accumulated in the inventory because it fails to differentiate itself from its competitors. In such a situation, marketing and positioning it as a lifestyle product based on its superior qualities may solve the problem.

Additional read: Fastest growing industries to start a business

Bundle them up

Here is the second most popular way of getting rid of old inventory. While the inventory movement is slow, bundling two or even three of these surplus products and offering them at a lower price may help. Sometimes, you can bundle multiple units of the same product. Shoppers see the bundling of high-demand products with low-demand ones at a discounted price as a bargain. Same-item bundles also appeal with their pricing and help clear more of the excess inventory.

Donate it

Suppose you have tried every marketing trick in the book and are still left with stale inventory, then that stock is already a loss. However, even in this situation, there is a way in which you can benefit – donations.

Unsold inventory can be donated to community events or some organisations as a public relations exercise. This will not only get rid of these products but will also improve your visibility in the community.

Additional read: The top 5 reasons companies apply for a business loan

The movement of inventory is intrinsic to the cash flow and finance of a business. For this, a mode of finance matching with the cash flow of the business is necessary. A Flexi business loan by Bajaj Finserv is an innovative borrowing tool that is scalable with the business objectives and entails paying interest only on the amount withdrawn.

So, when the inventory moves slowly, you pay interest only on the fund withdrawn and not on the entire loan. This is cost-effective for the business. Once the stocks start moving, you can repay the funds at your convenience.