Navigating Inventory Management Through Volatility

Once again, we find ourselves living in uncertain times. Rising interest rates, inflation, a slowing economy, and supply chain issues are among the many uncertainties business owners and leaders are facing.

Manufacturers and distributors, in particular, may experience challenges managing their inventory through periods of uncertainty — and that could have a dramatic impact on their overall operations and business profitability.

So, the question becomes, “What can business owners do to prepare their business for whatever lies ahead?” Consider these points:

1. Expand inventory visibility to accurately measure and manage more effectively. Are inflated inventory levels related to quantity or due to higher purchase prices?
2. Update your operations strategy to align with an uncertain future. Do you need to revise purchasing habits to fit a different operating environment or can you make an impact by focusing on slow moving inventory?
3. Dispose of excess inventory through sales incentives or donations. Reducing the risk of loss from inventory and generation of cash flow can be key during uncertain times.
4. Review the business’s inventory reserve strategy. Where might you benefit from a tax deduction on slow moving or dead stock inventory?
5. Revisit uniform capitalization methods of overhead in inventory for financial statement and tax purposes. Is the current method still permissible or still calculating a better answer? 

Navigating periods of uncertainty come with endless challenges. Proper planning can help reduce risk and present opportunities to help your business come out stronger on the other side.

For more information on inventory management in Iowa, contact Tyler Lind at tyler.lind@CLAconnect.com or 515-346-3645.

The information contained herein is general in nature and is not intended, and should not be construed, as legal, accounting, investment, or tax advice or opinion provided by CliftonLarsonAllen LLP (CliftonLarsonAllen) to the reader. For more information, visit CLAconnect.com.

CLA exists to create opportunities for our clients, our people, and our communities through our industry-focused wealth advisory, outsourcing, audit, tax, and consulting services. Investment advisory services are offered through CliftonLarsonAllen Wealth Advisors, LLC, an SEC-registered investment advisor.