Financial Management:Practicing Capital Preservation Strategies

Practicing Capital Preservation Strategies

At the end of the day, the success and health of a business is measured in one way: capital. In this series of blogs, we are exploring ways that distributors can gain healthy financial management strategies. We start all of this off by taking a look at the many ways distributors can get into trouble with finances.

Distribution business models contain many moving parts, and balance is extremely important, especially in terms of investment. Over-stocking, for instance, can lead to slowing inventory, dead stock, and other profit-stealing problems. The fact is, one imbalance can result in a disastrous chain reaction that has the ability to affect many aspects of your business. There is reason to be wary of where you invest within your organization.

All investments need to be made with capital preservation practices in mind. It is essential for distributors to preserve their capital and accurately plan for the right amount of product to be in their warehouse at all times. This prevents the value of products from dropping. From investments in new technologies and systems to the number of employed personnel, companies need to map out their priorities and needs.

Distributors also need better tools that improve an organization’s ability to estimate. By empowering business heads with the latest, most pertinent, and accurate information, the decision-making abilities within a business can propel operations – and profits – to new heights.

So, where do companies gain these powerful tools? Advanced Enterprise Planning tools are a great place to start. The expertise of a company that develops intelligent solutions specifically for distribution companies is another.

Acumen experts are often called in to help companies find the right solutions to fit their needs. Every business is different, after all, and for companies to see value in any solution, they have to pick the best solution for their business. Investing in products that will soon be obsolete is an example of one expensive trap organizations can fall victim to. It is essential to plan for the future, not just now.

Instead, invest in the best model for the job. The strongest distribution solutions, after all, do the best job of forecasting demand and keeping the right products on the shelves at the right time. This saves your company profits in the long-run and improves cash flow since you aren’t tying up your money in inventory that isn’t moving. Besides, the longer a product sits, the less it’s worth, typically.

To gain a higher level of prediction and help, companies need modern, intuitive technology advances to empower decision-makers. So what does Acumen recommend to help companies avoid these pitfalls? The answer is a really strong inventory forecasting and management tool – one that fits your business needs.

Learn more about how Acumen’s Enterprise Planning tools can improve the financial health of your business. Contact Acumen today!