From the numbers to the change
- Your numbers sayStock days up by three weeks, with a long tail of items not sold for six months
- The cause underneathBuying for volume discounts or hoped-for orders, no review of ageing
- What changesClear the dead tail, set reorder rules from actual demand, review ageing monthly
- What to expectStock days back down, cash released, space and interest saved
An illustration of how the thinking runs, not a client result.
The numbers to open first
Take the stock list by item with quantity, value and date of last movement.
| Number | How to get it | What worries us |
|---|---|---|
| Stock days | Stock / cost of sales x 365 | Rising for several quarters |
| Ageing | Stock value by months since last movement | A fast-growing slice older than 6 months |
| Top 20 items by value | Share of stock value | Large sums tied up in a few slow items |
| Carrying cost | Interest + storage + obsolescence on stock | Not measured, or ignored |
Likely causes, and how the numbers test each
| Possible cause | What you would see in the numbers |
|---|---|
| Over-buying to get a discount | Purchases up, sales flat; discount saved less than carrying cost |
| Demand misjudged | Stock built for orders that did not come; forecast far from actuals |
| Obsolescence | Items past their useful life or replaced by new models |
| Poor reorder rules | Stock-outs in some lines and excess in others at the same time |
What to change, in order of effect
Split stock into fast, slow and dead,
using the date of last movement.
Clear the dead tail
at the best realistic price. The value is already lost; what is left to save is the cash.
Set reorder points from real demand
by item, not from last year's habit.
Stop buying slow lines
until their stock reaches a target days cover.
Review ageing monthly,
with a named owner.
Business under pressure? Let a CFO read your numbers.
A senior CFO reads them with you and tells you what is really going on. No cost, no obligation.
What to expect, and when
Clearing dead stock can release cash within weeks, though usually at a discount. Reordering discipline takes a quarter to show in stock days. Your own team should count and verify the stock; the numbers are only as good as the count.
Mistakes that make it worse
- Buying more to take advantage of a volume discount without counting the carrying cost.
- Holding stock at cost when it can only be sold for less.
- Letting sales promise availability of every item.
- Measuring stock only in value, not in days.
Go deeper
CFOAvatar complements every turnaround
A human CFO sees your business at the review. Problems do not wait for the meeting. CFOAvatar is connected to your accounting data and checks your numbers every day, so the scoreboard in a turnaround is always current. Ask it what an owner in trouble would ask:
What owners say after the numbers started talking
Thanks to CFOSurge, we now know exactly what each product contributes to our bottom line. Our sales team operates with clear geography-wise data, our accounts are well-maintained, statutory payments are handled systematically, and our inventory is finally accurate. They didn't just fix our books—they helped us plan for growth.
In production, clear performance measures were introduced. A proper system was set up to collect data from the shop floor, making it easier to track output, idle time, and wastage. This has helped us control costs and improve efficiency.
Their regular monitoring of production expenses, including contract labor and overtime, has given us a granular view of our operations, paving the way for efficiency and cost savings.
Quoted word for word from our clients. Read more client words →
Questions owners ask us
What are stock days?
Stock divided by cost of sales, multiplied by 365. It shows how many days of sales are sitting in stock.
How do I release cash from stock?
Separate fast, slow and dead stock, clear the dead tail, and set reorder rules by item.
Is a discount for bulk buying worth it?
Only if the saving exceeds the cost of holding the stock for the extra period, including interest and the risk of obsolescence.