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Ways of Handling Excess Inventory

Ways of Handling Excess Inventory

Ways of Handling Excess Inventory
May 22
14:22 2017

There are many ups and downs that we have to face in our business. We need to prepare ourselves for dealing with every kind of situation. Otherwise, it will be tough enough for us to run the business. That is why it is important for every businessman to be aware of the advantages and disadvantages of business.

There are many disadvantages that you may have to face in your business. Excess inventory is one of them. To prevent this problem, you have to know clearly about this. Only awareness can help you to take necessary and prompt action while facing the problem.

What is excess inventory?

Excess inventory, also known as the dead inventory or the obsolete inventory means the extra products that have not been sold yet and have not enough demand in the market. They are considered as a warning for the company as they hinder the developments and profit of your company.

There are many things that can be held responsible for the excess inventory. If you know the reason, it will be easy for you to prevent. Here I have mentioned the possible causes of this overtaking problem.

Causes:

Buying more than the customers’ demands is one of the main reasons of facing overstock problem.
Decreasing of the demand rate causes decreases in the sales which finally results in excess inventory.
Another important reason for this problem is mismanagement.

These are considered as the main reasons for facing the problems. This excess inventory causes many disadvantages to your business. The disadvantages of it are discussed below:

•    Generally, a company buy inventory with the purpose of selling them with profit. Thus they run their business with the cash that is earned by selling the products. But if the demand for the products lessens, the chances of making the profit also lessen. Thus the excess inventory ties up the cash flow of your company.
•    The value of the extra merchandise lessens the longer they are held in the stock. As a result, it causes a huge loss of your business. It is really important to deal properly with this problem.

To deal with the excess inventory you must know what to do. You can solve this problem in many ways. You must choose the one that is not only suitable but also profitable for you.

Solutions of Excess Inventory:

1.    You can sell extra products to the liquidators. This will bring back the balance of your inventory list. You can find a general merchandise liquidators online.

2.    You can also hire a professional liquidation. The benefit of this solution is that you will only supply the ordered product. So the possibility of overstock will be decreased.

3.    You can also sell your extra merchandise online. There are many online auction sites like eBay but the whole the whole process can be proven lengthy.

4.    Selling the products by offline auction is another solution. You can also hire an auctioneer who will conduct an auction for your merchandise.

5.    You can also simply give your extra products to them who cannot afford them. Thus you can help the less fortunate person. Though in return you will not get any cash, it will bring self-satisfaction and also prevent the products being wasted. Besides, for your generosity, you can also claim a tax deduction.

In business, you may have to face many unexpected situations. So it is better to be prepared from the beginning.

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