Efficient inventory management is crucial for streamlined operations. Despite the ideal goal of selling every purchased item, the reality often involves challenges like losses and obsolete inventory that may require write-offs. Our focus is on helping small businesses address issues related to obsolete and excess inventory.

As a platform facilitating inventory funding for small businesses, we aim to support you in effective inventory management, ultimately enhancing your eligibility for funding. Once funded, proper allocation becomes vital, highlighting the continued significance of inventory management. Kickfurther specializes in providing businesses with affordable inventory funding, delivering flexibility and control over working capital. We believe in reshaping the funding landscape to align with the needs of growing businesses and contributing to their success stories. Regardless of preconceived notions about inventory funding, we are dedicated to challenging them and guiding you toward a path of success.

But first, let’s learn more about obsolete inventory, what it is, and how to avoid it. 

What is obsolete inventory?

Obsolete inventory is often referred to as excess or dead inventory or stock. Businesses classify inventory as dead if there is a lack of demand and believe they will have difficulty selling it. When inventory becomes obsolete, it ties up cash flow and space, both of which are valuable. Therefore, you will want to find a way to liquidate the inventory, or write it off and get rid of it. In some cases, obsolete inventory may be unsellable, which can leave you with fewer options. In addition to finished goods, raw materials can become obsolete, creating the same obstacles. In some cases, obsolete inventory is the result of poor planning, but there’s also the element of unpredictability.

The likelihood of having obsolete inventory can also be influenced by the industry in which you operate. For example, companies that sell perishable goods face more obsolete inventory than a company that sells plastic ware. As a business owner or manager, you will need to define obsolete inventory for your business and have a system to identify it. By effectively monitoring inventory, you can identify slow-moving products faster and improve forecasting. Both of which can help you maintain healthier inventory management.

Why obsolete inventory is a problem

Obsolete inventory is a problem because it ties up cash flow. Inventory is usually a business’s biggest expense. Holding inventory or raw materials that you cannot sell or turn a profit on can lead to big problems. Whether you choose to donate the inventory and use it as a write-off or liquidate it and take a loss (you can write down the loss), you should find a way to eliminate the obsolete inventory. In addition to cash flow, obsolete inventory takes up valuable space. 

Tips to identify and avoid obsolete inventory

The best way to identify and avoid obsolete inventory is to leverage an inventory management system. Most inventory tracking systems offer features such as real-time inventory tracking, automated replenishment, product categorization, and so forth. All of these features and more can help you better manage inventory and identify dead stock. Here are some tips on how to identify and avoid obsolete inventory.

• Invest in an inventory management system with demand forecasting: Historical sales and market trends can help you understand what sells and what volumes you need. With this information, you can make better predictions about future demand and sales, thus allowing you to purchase inventory more accurately. 
• Utilize lean manufacturing processes: Lean manufacturing processes focus on minimizing waste, such as dead inventory. You can run more efficient operations by focusing on efficiency and profit margins. You can also take the approach of Just-In-Time production, which entails only restocking goods or producing goods as needed.
• Regularly review inventory levels: Just because you have a sophisticated inventory tracking system does not mean you can manage inventory hands-free. Get involved, continue to find ways to improve reporting, and review inventory levels regularly to ensure the system is doing its job. 
• Monitor market trends regularly: As you try to stay one step ahead, it can be challenging to predict the future. Monitoring market trends by leveraging social media interaction, historical sales, emerging trends, and so forth can help you avoid obsolete inventory in the future. 

Managing obsolete inventory

Utilizing an effective inventory management system is the best way to manage obsolete inventory. Once you’ve identified obsolete inventory, consider the following methods for getting rid of it. 

• Offer discounts for bundling
• Remarket the items to help them sell 
• Run sales or promotional pricing 
• Find ways to liquidate or donate and write off the inventory 

How to prevent obsolete inventory

To prevent obsolete inventory, implement an advanced inventory management system that features demand forecasting. Additionally, perform regular audits of inventory. If you do not have an inventory tracking system in place yet, you will need to find ways to track inventory and demands to the best of your ability. When you’re just starting, it can be challenging to find the cash flow to invest in an inventory management system. However, doing so can save you in the long run while helping you grow faster. If you need working capital or funding for inventory, turn to Kickfurther for affordable funding that puts you in control of the business you’ve worked so hard to create.

Closing thoughts

Product businesses face high inventory costs. Keeping a pulse on what’s in stock, what’s selling, when to restock, and other important factors can help you maintain healthy cash flow and sales. If you have dead inventory, don’t ignore it. Invest time to address it and find ways to reduce or avoid it moving forward. If you opt to use inventory financing, backers or lenders will likely want to review your sales and inventory systems. Investing in advanced and efficient inventory monitoring systems can help you grow your business and secure additional funding, as needed.

How Kickfurther can help

Inventory can tie up cash flow, hence why obsolete inventory should be addressed sooner rather than later. You may need to leverage inventory funding to ensure you are investing in ways to grow your business and not just trying to keep up with inventory demand. Doing so can free up working capital to upgrade inventory systems and hire the right people. And that’s where Kickfurther comes in.

Kickfurther funds up to 100% of your inventory costs on flexible payment terms you customize and control. With Kickfurther, you can fund your entire order(s) each time you need more inventory and put your existing capital to work, growing your business without adding debt or relinquishing equity.

Do you need more reasons to choose Kickfurther?

No immediate repayments: You don’t pay back until your new inventory order begins selling. You set your repayment schedule based on what works best for your cash flow.

Non-dilutive: Kickfurther doesn’t take equity in exchange for funding.

Not a debt: Kickfurther is not a loan, so it does not put debt on your books. Debt financing options can sometimes further constrain your working capital and access to capital, or even lower your business’s valuation if you are looking at venture capital or a sale.

Quick access: You need capital when your supplier payments are due. Kickfurther can fund your entire order(s) each time you need more inventory.

Kickfurther puts you in control of your business while delivering the costliest asset for most CPG brands. With more free cash flow you can allocate more resources toward ensuring inventory is properly managed, thus avoiding obsolete inventory.

Technology has completely transformed the way owners run their businesses, including the practice of inventory management. IT inventory management can improve efficiency and help businesses operate lean. Inventory is one of the company’s largest expenses, so managing it properly is critical to operations and the bottom line. Utilizing inventory financing can help companies free up cash flow to invest in other growth avenues, such as IT inventory management systems. At Kickfurther, we help businesses obtain affordable inventory funding without giving up control of their company and working capital. As a non-dilutive funding solution, companies can take advantage of flexible repayment schedules and a platform that showcases their products to attract partners who love what they do. 

Ensuring you properly manage your inventory is an important first step before obtaining inventory funding. Here’s what you should know about IT and how it can improve inventory management. 

How IT Can Improve Inventory Management

Advanced inventory management systems can reduce errors while helping businesses operate more efficiently. When it comes to managing inventory, there are a lot of moving parts to compartmentalize. Trying to manage it manually is possible. However, it is nowhere near as detailed or effective as using an IT inventory management system. From demand forecasting to reports at the click of a button, investing in ways to improve inventory management will pay off in the long run. Here are some highlights on how IT can improve inventory management.

• Automation of tasks: IT inventory management can automate tasks that once required human labor. From counting inventory to notifying when it’s time to reorder, advanced IT inventory management systems can do it all. Additionally, they can track demand, seasonal trends, and just about anything you program them to be capable of. As you shop inventory management systems, drill down on your needs and see how the system can be customized to meet your needs. 

• Better accuracy: When it comes to inventory, accuracy is extremely important. Accurate inventory counts can help you determine when to reorder, identify loss faster, and predict seasonal demands. Advanced IT systems can possess sophisticated forecasting models that can help you stay one step ahead, thus improving efficiency and cash flow. 

• Improved insights: When making business decisions, you need the right information. IT inventory systems can provide detailed reports and insights that can help you identify trends and make better business decisions. Systems can adapt to your business to provide forecasting predictions that would be extremely labor-intensive for a human to replicate. While IT inventory systems can deliver valuable insights, you will want to know how to interpret them to leverage the information properly. 

The Benefits of Using IT for Inventory Management

• Reduced costs: IT can help businesses to reduce costs by automating tasks, improving accuracy, and providing insights. While human labor is often still needed, you can upgrade the type of labor you need, thus employing more educated individuals to help you monitor your biggest asset. With the information provided by the inventory management system, you can improve management information systems and inventory flow to reduce costs even more. 

• Improved customer service: IT can help businesses improve customer service by ensuring they have the products that customers want when they want them. When the online platform says you have the product in stock, you really should. With an IT inventory management system in place, you can avoid losing a sale or not being able to deliver for a customer due to a wrong inventory count. Additionally, IT inventory management can help you fulfill orders faster. From the speed you receive orders to the preciseness of finding where the inventory is located, you can create a seamless internal process that will impact the customer’s experience. 

• Increased efficiency: IT can help businesses increase efficiency by streamlining processes and reducing errors. Efficiency is important when it comes to managing the operations of a business, including inventory. You want processes to make as much sense as possible. IT inventory management systems can help you stock just the right amount of inventory, provide notifications when it’s time to reorder, provide exact inventory locations, and so forth. All of which are examples of how it can increase efficiency. 

• Enhanced decision-making: IT can help businesses make better decisions by providing them with real-time data and insights. Learning how to customize and understand these insights will be important. Forecasting demand is a game changer when it comes to stocking the right amount of inventory and avoiding obsolete inventory or dead stock. 

Closing thoughts

Inventory can consume cash flow. To support growing operations, you will need plenty of cash on hand. You can free up cash flow and invest in growth operations by using inventory financing. While this sounds like an ideal solution, it may be one you have explored, only to be detoured by high costs and barriers. Founded by an entrepreneur who once encountered similar challenges with inventory financing, Kickufurther is designed to truly help small businesses grow by providing the funding they need at a price they can afford.

How Kickfurther can help

Inventory funding can help you keep more inventory on hand while maintaining a healthier cash flow. While inventory funding comes at a cost, it can still be worth it. At Kickfurther, we are proud to offer authentic care for community business owners and backers while delivering funding up to 30% cheaper than comparable options. Kickfurther funds up to 100% of your inventory costs on flexible payment terms you customize and control. 

Need more reasons to choose Kickfurther?

• No immediate repayments: You don’t pay back until your new inventory order begins selling. You set your repayment schedule based on what works best for your cash flow.
• Non-dilutive: Kickfurther doesn’t take equity in exchange for funding.
• Not a debt: Kickfurther is not a loan, so it does not put debt on your books. Debt financing options can sometimes further constrain your working capital and access to capital or even lower your business’s valuation if you are looking at venture capital or a sale.
• Quick access: You need capital when your supplier payments are due. Kickfurther can fund your entire order(s) each time you need more inventory.

Kickfurther puts you in control of your business while delivering the costliest asset for most CPG brands. By funding your largest expense (inventory), you can free up existing capital to grow your business wherever you need it (hint: inventory management system). 

Inventory theft is sadly unavoidable for most businesses. Whether it’s theft by internal employees or retail customers, businesses should account for some loss in the form of theft. While some level of theft is unavoidable, business owners should take measures to make theft or loss as minimal as possible. Here’s what you should know about effective ways to prevent inventory theft. 

Why inventory theft is a problem

Inventory theft is a problem for many reasons. Theft has impacts from a loss of revenue to a decrease in inventory levels. If you don’t take measures to reduce theft, you could experience greater losses, which could have greater impacts, such as the inability to fulfill customer orders. The main reason inventory theft is a problem is that it impacts the bottom line. Additionally, with inventory being an asset, it reduces the assets of a company. It can also make inventory levels appear to be wrong as you will have less inventory than what you may have accounted for

Most Effective Ways To Prevent Inventory Theft

Conduct background checks on all employees who have access to inventory:

Unfortunately, internal theft is a big problem. With access to inventory and an understanding of how operations work, employees can steal inventory. Whether it be harmless, or completely intentional, you will want to do your best to reduce internal theft. One way to do so is to conduct background checks on all employees, especially those who have access to inventory. While some employees may not have been caught or reported, a background check can help you flag some potential hires who may have a history of stealing or unethical behavior. 

Install surveillance cameras at strategic locations throughout your warehouse or storage facility:

Surveillance cameras are powerful and you may not even need to monitor them 24/7 to make them effective. Just the threat of recorded footage can deter employees from stealing. If employees want to steal, though, they may find ways around the cameras. You may want some cameras hidden so that employees are not entirely aware of their placement. Footage from security cameras should be kept private so that employees are not aware of exactly what the camera covers. You also don’t want employees to be able to delete footage. 

Use an electronic security system that requires authorized personnel to enter sensitive areas:

Tracking who comes and goes from sensitive areas is another way to prevent theft. It holds employees accountable. When employees are held to certain standards, they are less likely to steal as the fear of getting caught is greater. 

Use barcodes or RFID tags to track all inventory items:

Inventory tracking systems can help reduce theft. They can also help you identify theft faster. While inventory tracking systems can be expensive, they are well worth the investment. 

Conduct regular inventory audits to ensure that your records are accurate:

When a theft occurs, inventory levels will reflect loss. Auditing inventory levels regularly can help you catch theft faster as well as determine how much loss you should be accounting for.

Train your employees on proper inventory procedures and how to spot suspicious activity:

Inventory counts should be taken regularly. This practice alone can deter individuals from stealing. If employees think you are not paying attention, they may sense an opportunity. Additionally, training employees on how to spot suspicious activity and encouraging them to come forward can help you identify theft sooner rather than later. 

Restrict employee access to sensitive areas based on job responsibilities:

Employees can have access to certain areas or inventory based on their job requirements or clearances. For security footage areas, high-dollar inventory areas, areas with cash, and so forth, you can restrict and or log who comes in and out. 

Encourage employees to report any suspicious activity immediately:

Employees need to feel safe and protected to report suspicious activity. Encouraging them is one thing, but reassuring them that the information will not be leaked is another. Employees are often scared to come forward for fear that retaliation will occur. Put a process in place for employees to anonymously or privately report incidents. They should not have to ask around to determine how to report theft. 

Have a zero-tolerance policy for inventory theft:

A zero-tolerance policy sets the precedent for employees that theft is not tolerated. Employees who value their jobs will likely be deterred from stealing if they see a coworker get terminated over stealing. 

Work with law enforcement to investigate and prosecute inventory theft cases:

As we mentioned earlier, theft is sometimes harmless and unintentional. Nevertheless, theft is theft. If you catch someone stealing, you should take action to report the incident. It’s likely that if someone steals once, they will steal again. Law enforcement can help you take action to reduce the potential risk of an individual stealing again while determining punishment for their wrongdoing to you. 

Closing thoughts

Inventory is the lifeblood of businesses. It is purchased and sold to turn a profit, and when theft occurs, the business suffers a loss. If you purchased inventory with inventory financing, you would have to cover additional loss. Maintaining accurate and adequate inventory levels is critical, as is maintaining healthy cash flows. 

How Kickfurther can help

Kickfurther can fund up to 100% of inventory, with flexible repayment periods. Without giving up equity in your business, you can secure the funds you need for inventory at up to 30% cheaper than other options. Kickfurther can help businesses purchase inventory while fostering growth and freeing up cash flow. Our funding model is unique and truly designed with the best interest of the future of every business in mind. Working with our community of backers, you can share your passion and successes to gain their buy-in. Before obtaining any inventory funding, you should have accurate financials documented. This includes how much loss you incur regularly. After obtaining inventory funding you will want to continue to monitor theft, as a general healthy exercise for the business.