Hiring guide
Slow-moving inventory: ask your CFO to compare clearance cash, not old cost
By CFO Index · Published
Old stock can occupy space and absorb attention without offering a realistic route back to cash. If you are hiring a fractional CFO for ecommerce or manufacturing, ask for a SKU-level decision brief: keep, clear, return or stop buying. An ageing percentage alone cannot tell you which choice makes sense.
Start with verified stock, not a discount campaign
Agree the cutoff, legal owner, warehouse and SKU scope. Reconcile quantities with the stock records and investigate damaged, reserved, returned and missing units. Operations should confirm which units can actually be sold. Keep incoming orders separate from on-hand stock. Choose one material product family for the first review rather than applying a blanket discount to everything labelled old. Record who can approve a price change and any customer or supplier restrictions that need checking.
Check what the age field means
Microsoft's Dynamics 365 inventory-ageing example groups stock into period buckets and shows that storage-dimension choices can change the quantity distribution. Its bucket logic deducts issued quantity using FIFO even when the item uses another inventory model. Those are product-specific mechanics, not proof of the physical age of each unit. Ask which date your report uses and whether transfers or returns reset it. Keep report settings with the export and test a transferred item before treating a young-looking bucket as newly purchased stock.
Separate recorded cost from future cash
Show the recorded inventory amount beside the options, but do not deduct an already paid purchase cost again when comparing future cash. Include unpaid supplier balances in the wider forecast. A clearance receipt is not all profit, and a stock balance is not guaranteed recoverable cash. Have the accounting owner assess valuation, write-downs and tax treatment under the applicable rules. This article compares operational cash choices; it does not prescribe an accounting adjustment or a legally permitted disposal.
Compare mutually exclusive choices
Hypothetical illustration: 500 verified saleable units have a recorded cost of €20 each, already paid. All options below concern the same units and a 90-day horizon. The invented prices and costs exclude taxes, fees and other company spending. Unsold units remain physically on hand in the keep and clearance cases; their future receipts are not assumed.
| Option | Units sold | Receipts | New cash costs | Net future cash | Units left |
|---|---|---|---|---|---|
| Keep current price | 200 at €30 | €6,000 | €1,000 fulfilment + €900 storage | €4,100 | 300 |
| Clearance campaign | 400 at €18 | €7,200 | €2,000 fulfilment + €600 campaign + €300 storage | €4,300 | 100 |
| Dispose all units | 0 | €0 | €500 disposal | −€500 | 0 |
Test the clearance assumption before committing
In the example, clearance produces only €200 more net cash than keeping the current price. That small difference depends on selling 400 units. At 300 units sold, with the same assumed campaign and storage costs and €5 fulfilment per sold unit, clearance brings €5,400 − €1,500 − €600 − €300 = €3,000. It then produces €1,100 less than the keep case. These are scenarios, not demand forecasts. Ask commercial owners for evidence of likely take-up and whether discounted sales would replace full-price purchases of other products.
Put dates and approvals on the decision
A campaign may require cash before receipts arrive. Schedule fulfilment, promotion and storage payments alongside collections; a positive 90-day total can hide an earlier funding gap. Confirm any supplier return credit and date in writing before including it. A proposal is not an approved credit. Test a bounded batch where operationally appropriate, recording the quantity, minimum acceptable outcome and review date. Keep a separate decision on future purchase orders so clearing old units does not trigger automatic replenishment.
What the CFO should hand over
Request the reconciled SKU list, ageing-definition note, option cash schedules, demand evidence and approval record. A colleague should be able to change units sold or payment timing and reproduce the comparison. Record unsold stock explicitly, not as a hidden recovery value. Review actual net receipts and remaining units after the test. The assignment is complete when management can explain the cash trade-off and unresolved accounting questions, not when the inventory dashboard turns green.