Inventory Cash Flow Management - Up to 36 Month Forecast
Originally published: 11/06/2018 08:41
Last version published: 15/02/2021 09:15
Publication number: ELQ-96301-8
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Inventory Cash Flow Management - Up to 36 Month Forecast

A way to plan out cash requirements for inventory purchases based on expected sales and seasonality.

***This now comes with 2 versions, one for startups with no inventory (V2), one for on-going operations (V2 Mod 1). Both include configurations for safety stock (minimum inventory level target) and payment terms.

If you have any business that requires you to buy supplies or any kind of inventory ahead of time and you have a varying amount of planned sales that is dependent on having enough supplies and inventory on hand, this financial model will be of assistance.

It is designed to adjust for a dynamic lead time (in days) that is entered per SKU. Based on that, you will see that the model tells you the day something
needs to be purchased in order for it to arrive before that SKU is depleted.

Unit sales are projected based on entered historical data by month by the user. Then, you can apply a % change over the next 12 months in each of those 12 months that looks at the historical average for that month and then adjusts it based on the % entered. This becomes your forecast for unit sales.

The beauty of setting up the structure as such is you can account for seasonality changes and based on that you get a better idea of when you need a certain amount of cash so that you can get the supplies / inventory in time to sell and before you run out.

Obviously it is not perfect and your projections could be off from the actuals. However, it is a good idea to know roughly when and how much cash you need in order to reasonably be able to purchase things. The ability to see cash flow timings is the strength of this model.

Plenty of charts and visuals are also included.

This Best Practice includes
3 Excel templates and 1 tutorial video

Acquire business license for $45.00

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Further information

Plan out the timing of cash needed for the purpose of inventory.

Any business that has to buy inventory and deals with various lead times.

A business that has no inventory.


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