Slow-moving goods are frozen money

Every item on a shelf was once money in your pocket. If it sells fast, the money returns with a profit and goes into the next purchase. If it sits for months, the money "freezes": it no longer works for you, yet rent, wages and loans keep being paid. In a small shop several million so'm can sit like this, and the owner often does not notice, because the goods are in plain view and so "the stock is there".

What frozen money looks like

Frozen money is the sum spent on goods that have not sold for a long time. For example, you bought 60 shirts in an unusual colour at 15,000 so'm each, 900,000 in total. If on average half a shirt sells per day, clearing them takes 120 days, four months. For four months that 900,000 so'm is not in your hands. Had you put it into a fast-moving item, it would have turned over several times and earned a profit.

There is further damage: slow goods take up space. They occupy a good spot on the shelf, they have to be counted, dusted and stored, and the risk that they expire or go out of fashion keeps growing.

How to spot slow goods

A simple method: add a "date of last sale" column to your product table. If it is hard to update as you go, refresh it once a month from the sales list. Then this rule works:

• not sold for 30 days: keep an eye on it;
• not sold for 60 days: time to act;
• not sold for 90 days (about three months): frozen stock.

Another useful measure is how many days the stock will last: stock ÷ average daily sales. If you have 60 on the shelf and sell 0.5 a day, the stock lasts 120 days. For ordinary goods 15 to 30 days is a good figure, while 120 days is a warning signal.

How to thaw the stock

The aim is to turn goods back into money without loss, or at least at a price close to cost. The options:

1. A promotion or discount. If even 10 to 20 percent off does not move the item, consider more; selling at cost is still better than holding it, because the money you free up goes to work on new goods.
2. A bundle. Attach the slow item to a fast one and offer them together at half price.
3. A change of place. Put the item by the till or at eye level; sometimes that alone is enough.
4. Return or exchange with the supplier. If you have an agreement, some goods can be swapped for others.
5. Wholesale. Sell the remainder in one lot to acquaintances, other shops or through an online advert.

Expired or unusable goods should simply be written off and removed: they will not earn anything and only spoil your records.

How to avoid freezing money in future

Preventing the problem is cheaper than solving it:

• try a new item first with a small batch (5 to 10 pieces);
• do not let a batch exceed a "month's sales";
• review the list of unsold goods every month and do not reorder them;
• have an answer to "why am I buying this?": which customer it is for and when it will sell.

In the first week of each month, set aside 20 minutes: sort the table by "date of last sale", look at the top 10 items and make one decision for each: discount, bundle, return or write-off. An item with no decision made will be on the same list next month, and the money will stay frozen with it.

The most common mistakes

• "The price is good, I'll take more": a big batch does not sell in a short time.
• No discount is given on slow goods so as not to lose on price, and they sit for years.
• Goods left over from the season are kept for the next one, but by then they are out of fashion.

Conclusion

Frozen money is a silent loss: it does not show up in a report, it just lies on the shelf. A monthly check by "date of last sale" is enough to keep it under control. If you do not know which goods have been sitting for how long, AniqHisob can count your stock during an inventory and also prepare a list of slow-moving goods.