Plan the cash behind the next inventory order.

Follow inventory all the way back to cash

A purchase order commits cash before stock necessarily generates sales. Build a calendar from supplier deposit through delivery, shelf or online availability, customer sale and payment settlement. Include freight and other landed costs, then allow for returns and markdowns. Separate strong-selling replenishment items from seasonal bets and slow-moving stock.

Look at cash by sales channel. Store sales, online orders and marketplace receipts can have different settlement patterns and costs. A sales report is not a bank-availability forecast. Use observed settlement dates and known reserves or holds where applicable, rather than assuming every sale is spendable immediately. Track the supplier bill’s due date independently.

Test margin as well as sales

A larger order can increase revenue while tying up more cash than the business can comfortably carry. For the planned stock, estimate net sales after returns and discounts, landed cost and the remaining gross profit before operating and financing costs. Check how much markdown would erase the expected benefit of buying more.

Compare the order with recent sell-through and stock aging. Identify the quantity needed for proven demand, the quantity dependent on a promotion and the quantity that may remain after the season. Avoid treating the entire inventory balance as equally liquid or eligible for financing. Ask what happens if leftover stock must be discounted rather than sold at the original price.

Match the financing question to the use

Repeat inventory purchases and a store renovation have different cash-recovery patterns. Ask how repayments relate to actual receipts, whether availability can change, which fees reduce usable proceeds, and how the structure works during a slower sales period. If the proposal involves revenue-linked payments, clarify the calculation, collection method and reconciliation process in the actual agreement.

For an inventory-backed proposal, ask which goods count, how stock is valued and how reporting or aging affects availability. No inventory advance rate is assumed here. Also compare non-financing adjustments such as smaller replenishment orders or different delivery timing, where commercially available. Do not build the cash plan on an unconfirmed supplier concession.

Prepare the buying and repayment case

Bring recent financial statements, business banking history, sales by channel, stock aging, supplier payment dates and existing financing payments. Add the proposed purchase, expected delivery date, estimated selling period and a conservative sell-through case. Explain whether the need is seasonal, recurring or part of a permanent expansion.

The summary should show how much cash the order requires, when that cash returns and how the business covers its other obligations in between. Buying a retail business is a separate analysis: purchase price, transferable inventory, lease arrangements, buyer contribution and transition cash belong in an acquisition review. Do not substitute this operating inventory plan for buyer diligence.

Put your own numbers on one page

Record opening available cash, expected receipts by date, committed outflows, the minimum cushion you choose and the resulting lowest cash balance. Include existing obligations and any proposed financing payments. A shortfall against your cushion is a planning signal, not an approved borrowing amount.