Financial Guide for SMEs - SME Corporation Malaysia

Financial Guide for SMEsTIPS FOR IMPROVING INVENTORY CONTROL• For fast-moving inventory, negotiate with suppliers for delivery whenrequired (JIT or just-in-time), eliminating the need to hold a largeamount of inventory to meet customer demand.• For old and excess inventory, either sell at whatever price to move it,or use as a donation to a charity or community group. (Do not forgetto advertise that you have made a donation!)• Keep accurate inventory records and match the records to a physicalcount regularly – at least once a year. However, if there are largevariances between the records and physical count, do the countmore regularly until the issues are identified and corrected.• Understand your inventory: which ones move quickly, which onescontribute the highest gross margin, and which ones are seasonaletc. This will help you know how much of each line of inventory tokeep on hand and when re-order is required.• Use your financial system to track inventory items. This will helpwith both:o Automating re-order requirementso Matching different inventory items to sales and easily identifyinghigh margin high sales. margin sales.• Keeping good control over your inventory holdings will ensure thatyou keep old and excess inventories to a minimum and reduce therisk of theft, while still having adequate inventory levels to meetyour customers’ needs.52Chapter 2-5 p22-65 Eng.indd 528/15/11 5:01:57 PM