Inventory
The order is the cash problem.
Stock gets paid for long before it's sold. You wire a deposit, you wait for the container, and you pay the balance when it lands. Only then does any of it start turning back into money.
Start the plan your orders sit in, or see what one order does to the bank below first.
The profit on the order can be perfectly good while the months in between are what closes the shop. From the deposit to the first sale you're carrying the whole order, and the low point is the day the balance clears.
This is the one thing the spreadsheet templates get wrong. They charge the stock to the month it sells, so the money never leaves early and the low point never appears. The plan looks fine right up until the wire goes out.
What one order does to the bank
| What | When | How much |
|---|---|---|
| Deposit, when you place the order | - | $18,000 |
| The balance, when it lands | - | $42,000 |
| The low point, all of it out and none of it sold | - | $60,000 |
| Back to where you started | - | - |
One order at a time, this is what the bank sees. Two orders overlapping is what the model is for.
What the full model adds
- A purchase order table: the amount, the deposit percent, the lead time and the month it lands, with the cash falling where it falls.
- Inventory on the balance sheet, drawn down as the stock sells, and a warning on any month the plan would run out of it.
- The rest of the working capital beside it: what customers still owe you, and what you still owe suppliers.
- The lowest cash across three years with every order in it at once, which is the number one order at a time can't show you.
Building a plan is free. Saving it to an account, Excel and the print pack come with a paid plan, and the pricing page lists what each one holds.