The costs of holding your stock
Did you know that while you have stock on your shelves you are incurring costs?
When businesses hold stock possible costs may arise such as:
- Insurance costs
- Damage and obsolescence costs and/or
- Stock maintenance costs, including interest on borrowings
Some estimate the figure for keeping stock on your shelves is 20 per cent of the value of that stock.
Good stock management needs to be employed to ensure a profitable and successful business.
Look carefully into your stock levels, your customer desires and your stock turnover rate to ensure you are managing your stock efficiently.
Effective stock management is knowing what stock to buy, when to buy, how often to buy and at what quantities to meet customers’ demands. The lower the level of stock sitting in the storeroom, the lower the holding costs.
Contact your ARW Chartered Accountant to get advice regarding the cost of holding your stock, and work with you to efficiently manage your stock levels.