Small Business Cash Flow Idea...

Small Business Cash Flow Idea... Know When to Reorder Your Products.

One of the simplest ways to reduce your inventory expenses and help your cash flow and the associated storage costs is to determine the best time to order new or replacement stock.

As inventory levels fall, you must know at what point a new order should be placed to ensure you are still able to meet the demands of your customers.

This point is often known as the order (or reorder) point.

When you reach the designated order point, it is time to immediately request more stock from your supplier.

Determining your order point will differ from business to business, however there are some common factors that all business will need to take into consideration.

• How much of the stock is sold or used daily, weekly or on a fortnightly basis?

• How long does it take for your supplier to deliver products?

• Are there any savings to be gained from increasing or decreasing your order point?

• Are there any special seasonal factors that may affect your order point?

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