Phone: 01242 260066 | Email accountants@mitchells.org

Stock control

At Mitchells we can provide start-up businesses in the Cheltenham area with help and advice. Here are some issues to consider regarding stock control.

Inefficient stock management can seriously damage the profits of any new or growing business. Holding stock ties up valuable cash, and incurs costs in warehousing, personnel, transportation and insurance.

In an ideal world, every business would have no stock at all but would operate entirely on a well-tuned just-in-time system with materials and parts arriving in the order and quantities in which they are needed for retailing, or for the manufacturing or assembly process.

But since most small businesses do not have the resources to implement just-in-time, here are some suggestions for reducing stock costs:

  • Identify those materials that are commonly used in numerous different products - and use them as widely as possible
  • Check the quality and accuracy of goods received from suppliers. If you only spot the poor quality at the end of the process, it is too late.
  • However, if you work closely with your suppliers and build up a relationship of trust, you may be able to cut down on the time spent checking the materials that come in
  • Wherever possible, reduce the lead time for ordering materials, but take care not to unwittingly create hold-ups in production
  • Constantly review sales trends and cross-reference them with stock requirements
  • Make sure delivery schedules are well choreographed with production - try to avoid holding any more finished products than you really have to
  • Try to negotiate discounts on virtually everything that you buy and then negotiate terms for payments and interest rates.

Caution

Finally, a note of caution: although it is generally best to keep stock as low as possible to avoid tying up capital, this might not always be the case if there are really significant bulk discounts available.

If you decide to make changes to your stock levels or procedures, be sure to do so within the context of the business as a whole: never make stock decisions in isolation.

If you are starting a business in the Cheltenham area and would like help and advice, contact Mitchells.

Try a site search Tax returns, budget, pension, rates and allowances...

Contact details

Office: 01242 260066

Company Registration No: 4161638
Company Registered in England and Wales.
Company details
Mitchell Glanville Limited
Registered Address: 41 Rodney Road, Cheltenham, Gloucestershire GL50 1HX

Mitchell Glanville Limited regulated by the Institute of Chartered Accountants in England and Wales If, during the provision of professional services to you, you need advice on investments, we may have to refer you to someone who is authorised by the Financial Conduct Authority, as we are not. However, as we are licensed by the Institute of Chartered Accountants in England and Wales, we may be able to provide certain investment services where these are complementary to or arise out of the professional services we are already providing to you.

© 2024 Mitchells Chartered Accountants. All rights reserved. We use cookies on this website, you can find more information about cookies here.