Inventory Metrics that WILL Increase Cash Flow

Posted on 14 Oct 2016

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I’ve seen it more times than I care to remembera room filled with pawnbrokers, and the question gets asked, “How many of you do regular inventory audits?” Only a few will raise their hands. Sadly, fewer yet will attest to using inventory reports generated by their software to MANAGE their inventory. It's safe to say that if someone wanted to increase their cash flow quickly, it would be done on the inventory and sales side of the business. Let’s face it; nothing is going to instantly change the amount of cash coming in from service charge payments and redemptions. Sure, there are long term strategies that can increase those but creating that buying frenzy and getting merchandise off the shelf quicker is the key to making quick cash!  

Of even greater importance is knowing what inventory should be marked down, advertised, and SOLD!  So what should I be looking at if I have inventory reporting that I can manage by? Let’s start by knowing what you have and how long you’ve had it. You may be a “collector” of sorts, but I doubt that you are interested in collecting items that have been on your shelf for 6, 9, 12 months... Or more! Yes, I’ve seen it and yes, it’s more abundant that you would believe.

Your “Inventory Aging” report in PawnMaster is critical in knowing items that are just not moving in your store front. In PawnMaster, you can run this report and take a look at the money that is being tied up that could be going into more profitable items coming through your door. Free this cash up and reinvest it in to your business to make more money quicker!

Be aggressive in your sales pricing and advertising, try pushing some of these items out online to craigslist.  An online sale from craigslist may not only sell the item instantly, but will bring in a new customer that may never have otherwise stepped foot in your store. And hey, no shipping! 

So now you know your worst selling items, but what about your best? PawnMaster reporting looks at your “Inventory Turns” to understand how many times per year you are selling certain categories of items. If you see some better performing items at 5 or 7 times, it would make sense to be sure you are doing everything you can in your store to ensure these items are not getting turned away and that you have plenty of stock on your shelves. 

When we are talking about increasing sales, it’s hard to also ignore the seasonality of the business. We all get caught up in the hustle and bustle of the busy season, but are we taking time to prepare to fully capitalize on the holidays? It's very easy to run PawnMaster's “Inventory Sales” report for the year’s previous season to find out what items were selling and the clientele demographic they were sold to? This is crucial to plan your sales and marketing strategy.

Know your inventory, know the metrics you want to manage by, and trust the numbers. Get your staff onboard and informed of your findings and don’t be afraid to spiff them for those increased sales.

Tom Streng

Written by Tom Streng

Tom Streng, co-founder and Chairman of the Board at Data Age Business Systems, is responsible for working closely with the executive team on growth and investment strategies for the company. Tom has dedicated nearly thirty years to establishing the company as the leading pawn shop software. As a pioneer in the industry, Tom’s expertise is second to none when it comes to understanding the needs of the pawn business, as he continues to actively contribute in several aspects of the operation including new product design, development, strategic partnerships and go-to-market strategies. He has published works throughout industry journals and has a Bachelor’s degree in computer science from Central Michigan University.

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