How To Improve Your Cash Flow By Balancing Your Merchandise

By Bob Phibbs

retailer cash flow merchandise

You know within an employee's first 30 days whether they can do the job, right?

The biggest drain on a retailers’ cash flow can also be seen within the first 30 days …

It's your merchandise.

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Here are five tips to help your cash flow by managing and merchandising your merchandise.

#1 Make sure your merchandise arrives during the proper season.

That means you take delivery just prior to the season. Toy stores often tell me, It will sell Christmas. That's fine, but you don't want your money sitting on the floor for nine months waiting to be returned to your wallet.

#2 Predict it.

Know a sales target for how many you want to sell within those first 30 days.

Is it 20% sell through? 40%? Decide before you place a large order of a product what the critical mass has to be for it to be considered a winner.

#3 Return it.

Tell your sales representative that if it doesn’t sell enough in the first 30 days you're going to want to return it and get a refund or credit.

Most will hem and haw but don't let that deter you. They are there to be a partner in your retail sales success.

#4 Don’t go by units sold to determine sales.

Employee purchases often skew your sales reports for new items resulting in unprofitable re-orders.

#5 Clear out the merchandise.

If it isn't selling during those first 30 days. If the rep won't take it back, you need to quickly clear it out. Slow moving merchandise is the killer to your cash flow.

See also, Merchandising: How To Attract Retail Customers Without Discounting 

Use these tips to keep your merchandise moving and your cash flow positive.

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