The Impact of Inventory Control on Cash Flow

How Tighter Inventory Control Can Improve Cash Flow

The Impact of Inventory Control on Cash Flow

A healthy cash flow is crucial for businesses, especially during challenging economic climates when many are concerned about their near-term future. In uncertain times, businesses often experience a reduction in revenue, while expenses and operating costs remain constant or even start to rise. Without adequate cash reserves, businesses may struggle to meet their financial obligations and finance teams need to go back to basics, carefully review their finances and properly manage their cash flow.

For any business that buys and sells products, inventory control plays a huge role in cash flow. It’s key to ensure that you have the necessary resources to sustain operations and meet demand, but this can result in money being tied up in inventory. If you’re looking to optimise your cash flow, minimising expenses related to buying, holding and selling items is key, and the importance of improving inventory management shouldn’t be underestimated.

Fortunately, having tighter inventory control can help to improve cash flow and if you’re concerned about the current economic climate, now is the time to focus on your inventory. Below we have explored how inventory management can help with cash flow and how NetSuite can support inventory-related savings.

The Impact of Inventory Control on Cash Flow

Inventory is a significant investment for companies and managing inventory levels can have a direct impact on cash flow.

One of the main ways that inventory control affects cash flow is through the cash tied up in inventory. When a business purchases inventory, it ties up cash that could otherwise be used for other purposes. Additionally, maintaining high levels of inventory can result in increased storage and holding costs, which further drain cash reserves. On the other hand, too little inventory can lead to lost sales and lost revenue. If a business is unable to meet customer demand due to low inventory levels, customers may take their business elsewhere.

Effective inventory control involves finding the right balance between having enough inventory to meet customer demand and minimising the amount of cash tied up in inventory. By finding the right balance, businesses can maximise their financial resources and better position themselves for long-term success.

Revolutionising Inventory Management with NetSuite ERP

Businesses can use technology to help manage inventory levels and optimise cash flow, like NetSuite. Inventory management software can provide businesses with the insight they need into their inventory levels and help to identify opportunities for cost savings. By using technology to manage inventory, businesses can make informed decisions about when to order inventory, how much to order and how to allocate resources more effectively.

NetSuite’s comprehensive Enterprise Resource Planning (ERP) solution provides businesses with financial management and inventory management in a single system. This enables you to see how your inventory is affecting your financials, and it makes it easier to understand the impact that these two key components have on day-to-day business operations as well as one another. 

Analysing Sales Data

A popular strategy for effective inventory control is to analyse sales data and identify products that are slow-moving or have a low-profit margin. This enables you to reduce the inventory levels of those items and concentrate on items that contribute most to your bottom line.

NetSuite will help you to strategically manage your inventory levels and minimise the amount of cash tied up in inventory without losing sales or sacrificing customer satisfaction. The user-friendly dashboards make it easy to access real-time data and the consolidated reporting enables you to analyse historical data. It will be easy to track things like sales trends and margins, so you know which SKUs are profit-makers and need to be pushed.

Forecasting Demand

To prevent you from ordering too much or too little inventory, it’s essential to have accurate forecasts. When you order the right amount of specific items, you can ensure that you’re able to meet demand but you’re not stuck with unsold stock, increasing your bottom line.

When you use NetSuite ERP software to your advantage, you will have access to the mission-critical data you need to make better decisions. You can create accurate reports about inventory levels and performance, and use these to support purchase decisions. It will be much easier to ensure you have the right amount of inventory at the right time and NetSuite forecasts can meet the complex needs of different businesses.

Monitoring Inventory Levels

Having ‘safety stock’ is important regardless of which sector you operate in. However, incorrect or outdated safety stock targets can result in holding too much stock. When money is tied up in safety stock, it can’t be used elsewhere and inventory levels could be draining cash reserves.

Integrating NetSuite software into business processes can help you to monitor inventory levels and ensure that safety stock is kept up-to-date. By taking into consideration things such as historical and seasonal demand as well as supply chain predictability, the accuracy of safety stock targets can be improved. NetSuite can also calculate reorder points, helping to ensure you’re always holding the right amount of inventory.

Improving Inventory Data

To improve inventory control, it’s essential to ensure the numbers in your system match on-hand quantities. Far too often inventory isn’t accounted for and businesses don’t have accurate data, which causes an abundance of problems later down the line.

NetSuite ERP can be used to increase the reliability and accuracy of inventory data, and it will be easier than ever before to update inventory records. You can perform cycle counts as well as full inventory counts with this smart business software, and counts can be adapted to your specific needs. When you account for inventory properly, you can avoid discrepancies and make decisions based on accurate inventory data.

Reducing Fulfilment Costs

When you operate across multiple locations, knowing the location of your inventory is crucial and it can help to support fulfilment decisions. By shipping from the best locations, you can reduce shipping costs and boost your profit margins.

Using a comprehensive ERP system like NetSuite can help to improve real-time visibility across locations. You can also save a considerable amount of time and effort by removing the need for manual order reviews, and the system will automatically assign orders to the best shipping locations. Making better fulfilment decisions won’t just reduce shipping costs, but it will also reduce shipping times which can have a knock-on effect on customer satisfaction.

Working With a NetSuite Business Partner in Ireland

Ultimately, improving inventory management is key to improving cash flow and it’s undoubtedly worthwhile focusing on inventory control if you want to free up cash for other purposes. If you’re interested in NetSuite business software and you’re wondering how it can benefit your operations, don’t hesitate to contact our team at OSSM. We collaborate with businesses across a range of industries and help them to overcome unique challenges.

As a trusted NetSuite Solution Provider in Ireland, you can rely on us to deliver flexible and long-lasting cloud solutions. Our team will happily assist you with your NetSuite project and help you to establish the best solutions to your needs. We can even provide you with a NetSuite product tour to help you determine whether it’s the right option for your business.

Why not explore our NetSuite Guide?

Download our guide: Where Warehouse Management and Finance Collide, where we have explored some common problems associated with basic warehouse management systems. 

On June 20th, we will host a webinar to help businesses maximise inventory ROI with NetSuite.

The following topics will be discussed:

• Key Challenges for Distributors
• The Critical Role of Inventory Planning
• Precision Forecasting
• Efficient and Green Warehouse Management
• The Impact on the Bottom Line

See link to register:

About the Author

Picture of Naren Sompalli

Naren Sompalli

Naren holds a Bachelor of Engineering degree from BNM Institute of Technology. As a NetSuite specialist, he is involved in implementation at OSSM, collaborating with a team of experienced consultants. Naren conducts workshops for solution implementation and delivery, providing technical support and expertise.

Key Additions To Any CFO's Checklist

Key Additions To Any CFO’s Checklist

Key Additions To Any CFO's Checklist

The role of a Chief Financial Officer (CFO) is dynamic and demanding. This position is at the heart of an organisation’s financial operations and it has changed a lot over the years. A CFO’s day-to-day activities encompass a vast range of responsibilities, from monitoring key metrics to strategic financial planning. However, there is always more that can be done to drive a business forward. After all, the CFO plays a pivotal role in shaping the financial health and overall success of the organisation.

For CFOs looking for ways to not only improve their organisation’s financials but stay abreast with other aspects of the business and cement themselves as strategic stakeholders, we have created a list of key additions to a CFO’s checklist. While there might not be enough hours in every workday for these tasks, finding time to incorporate them into your workload can help to improve your professional performance as well as the performance of the business.

Host Frequent Meetings With Team Members

There is no denying that communication is essential in business and as they’re in a leadership role, a CFO should keep in touch with their team. To improve communication throughout your department, it’s beneficial to host meetings with your team on a more regular basis. Not only do these meetings provide you with an opportunity to support your team with any concerns they may have, but it enables you to offer coaching to aid ongoing development.

In addition to hosting meetings within your department, you should find time to stay up-to-date with other aspects of the business too. Improving communication between departments can help others to understand how they impact the overall financial performance of the business. By openly discussing with different departments how their decisions can affect cash flow for the whole business, you can ensure everyone is on the same page. Improving communication can have a positive impact on financials moving forward.

Automate More Processes and Daily Tasks

All CFOs should be using technology to their advantage on a day-to-day basis. Automating time-consuming and error-prone tasks is a great way not just to improve productivity, but boost the organisation’s bottom line. During financially challenging times, automating business processes can help to reduce the need for hiring more employees too. You may be surprised by just how many different tasks you can automate with the right technology.

It’s not just the finance department that should be automating tasks either. Introducing more efficient ways of working throughout the organisation can have a huge impact on budgets. So, new software and systems should be seen as an investment. Using technology throughout the whole supply chain can assist with everything from inventory management to faster decision-making, boosting overall business performance.

Be Proactive on Social Media

In this digital day and age, it’s more important than ever for CFOs to maintain their personal brand. Using platforms like LinkedIn, CFOs can stay up-to-date with the latest financial news and get involved in conversations with other industry professionals.

Regularly updating your LinkedIn profile with qualifications and awards is always beneficial, and you should be proactive in connecting with other financial professionals in your industry. In addition to commenting on other professionals’ posts on LinkedIn, consider writing your own posts. This is a great way to engage with other CFOs and boost your profile. Think of social media platforms like LinkedIn as a modern alternative to networking events.

Keep in Touch With Other Departments

As mentioned above, a CFO needs to communicate with other departments and educate them on the impact their decisions have on the business as a whole. However, as head of the finance department, you should also take some time to learn more about the struggles faced by different departments and the inefficiencies they’re experiencing.

Encouraging the whole finance team to engage in conversations with people from other departments can provide you with invaluable insights into what’s going on in the rest of the organisation. Simple ‘water-cooler chats’ during coffee breaks or lunches can help you to learn more about the challenges, priorities and goals of different departments. As a CFO, this puts you in a better position to collaborate with others and make decisions that benefit the business.

Provide Analytics Beyond the Finance Department

Tracking a range of Key Performance Indicators (KPIs) across the business can help you to understand how the organisation is performing in real time. Not only should you be tracking financial KPIs, but there is an array of operational KPIs that can help to improve business processes and support data-driven decision-making.

Helping other departments understand the data and analytics that are available to the finance team, and use these to improve their operations can have a positive impact on the business. Providing departments with KPI graphs, for example, can simplify information and help to improve their understanding of current performance from a financial perspective. When you provide different departments with straightforward analysis of KPIs, you can ensure that everyone is working together toward the same goal of improving the bottom line.

Invest in New Technologies

Should you find that your technology is no longer working efficiently for your business, investing in new systems can transform your day-to-day operations. When trying to automate more processes, you may find that you don’t currently have the capabilities to streamline everyday tasks and this can highlight the need for new technologies. With such a huge array of options on the market now, there is a software solution that can improve every aspect of your business.

Making the right technology investments at the right time can transform the way different departments operate and in turn, the organisation’s financial situation. Implementing powerful and intelligent software like NetSuite has proven time and time again to change the way organisations do business. NetSuite solutions can improve efficiency by simplifying and streamlining complex processes across various departments. Not to mention, these flexible, cloud-based solutions offer unparalleled transparency. By bringing a new level of intelligence to your organisation, NetSuite can boost your bottom line.

As a modern-day CFO, adding the above tasks to your checklist can help you to ensure you remain a strategic advisor that’s benefiting the whole business. Remember, finance directly impacts every department and CFOs can improve an organisation’s long-term profitability and prospects. If you’re interested in finding out more about how you can use technology to support both financial management and business management as a whole, contact our team at OSSM.

We are leading NetSuite consulting partners. Our expert team understands that all businesses have different problems and our consulting services can help you to determine the best systems for your specific needs. The creative and flexible NetSuite solutions we provide can help to improve your business both now and long into the future. We genuinely care about the outcomes of our projects, and we are passionate about helping our clients implement changes within their organisation.

Click below to download this guide to the top 20 best KPI’s for your business:

Tracking Key Performance Indicators (KPIs) for Business Success

The Importance of Tracking KPI’s

Tracking Key Performance Indicators (KPIs) for Business Success

We run our business based on a core set of KPI’s relevant to our business and our industry. The value of being able to spot deviations at a glance and be able to tweak as we go means that there are no big shocks, just some small bumps that need smoothing out every now and then. Staying on track is so much easier to achieve when there is a track to follow in the first place.

Before we get deeper into this topic, let’s first of all take a look at what KPIs actually are. KPIs, or Key Performance Indicators, are performance measurements that allow businesses to track the progress of their goals and objectives. These indicators are hugely beneficial as they are used to assess the effectiveness of strategies, operations and performance.

Understanding and tracking KPIs is key to not just meeting objectives, but business growth as a whole and the more you can learn about the success of your current operations, the better a position you will be in to drive your business forward. Making data-driven decisions without KPI data can be time-consuming and complex.

Below we have shared our thoughts on KPIs and have listed some widely used KPIs that are worth tracking, regardless of what industry you operate in.

Why should businesses track KPIs?

KPIs are more than just numbers, they’re an invaluable insight into how well your business is performing and they can provide you with an accurate snapshot into various aspects of your operations. By tracking KPIs, you can better understand your strengths and weaknesses, measure progress and make any necessary adjustments to stay competitive. Having a core set of KPIs to identify areas for improvement can help you to make better changes to day-to-day operations and ensure your business stays on track.

As well as analysing your own performance, KPIs are a great way to compare your business against your competitors and industry standards, helping you to make better and more informed strategic decisions to help you stay one step ahead.

What can KPIs be used for?

There are many different types of KPIs and they can all be useful for different reasons. Most commonly, KPIs are used to monitor the following:

  1. Performance: Financial & Operational
  2. Satisfaction: Customer & Employee

Every business has a different way of operating, so the KPIs you should track will be dependent on your overall business goals as well as the goals of different departments, teams and employees KPIs can also change over time, usually as your business objectives change and they can help you to determine whether you’re achieving your current goals.

We would suggest that it’s good practice to track both high-level KPIs that focus on overall performance and lower-level KPIs that focus on individual departments. Similarly, you should also track both leading and lagging KPIs, so you’re reflecting on past results as well as predicting future results.

How do you track KPIs?

Spreadsheets are great for so many things but tracking KPIs is not one of them. They can be time-consuming and prone to errors. It’s much easier to use tried-and-tested ERP software, especially as your business grows and you have more complex KPIs to track. Solutions such as NetSuite can provide you with all of the key data you need to calculate and track KPIs. KPI dashboards can be easily set up to present you with the information you require in real-time.

The integrated reporting and analytics capabilities within systems such as NetSuite make it easy to track KPIs and reporting will be more streamlined. You can even set up regular reports that provide you with the up-to-date data you need, so it couldn’t be easier to measure success.

Which KPIs should businesses be tracking?

While KPIs will be business or industry specific, here are a few KPIs that are relevant to most businesses.

It’s recommended that businesses track financial KPIs, such as; ‘operating profit margin’ which shows the percentage of profit you make from operations and ‘budget Vs actual’ which compares your actual spend against budgeted amounts. Some operation KPIs are also incredibly useful, such as; ‘sell-through rate’ which compares the inventory sold to the amount of inventory ordered from a manufacturer and ‘perfect order rate’ which measures how many orders are shipped without issues like damage, inaccuracies or delays.

Using NetSuite solutions to track KPIs

If you’re interested in finding out more about how NetSuite solutions can make it easier for you to track important KPIs, get in touch with our team at OSSM today. We have many years of experience helping our customers implement NetSuite software into their business operations and we provide solutions that completely transform what they do and how they do it. NetSuite’s SuiteSuccess software includes a bundle of pre-built industry-specific KPI’s built on best practices that can help set you off on the right track, quickly.

As an experienced NetSuite Partner in Ireland, we match our team and their expert skill sets to our customers’ needs and we provide tailored advice to help them overcome challenges. We’ve a huge amount of experience in the Manufacturing, Services, Distribution and Field Service sectors and we can provide you with a flexible and scalable NetSuite solution that helps you to track crucial KPIs and remain competitive in today’s fast-paced world.

To get a full list of the 20 most widely used KPIs that every growing business should track, download the NetSuite business guide below.

Best Field Service Management Software

10 Common Questions We’re Asked When Businesses Start The ERP Journey

Best Field Service Management Software

There are so many advantages to investing in an ERP system and it’s something that the vast majority of businesses will decide to do at some stage. ERP solutions can manage your business and operational requirements in a smart and efficient way, and they are highly flexible, powerful and insightful. Cloud-based ERP systems are often the first choice for many businesses looking to improve efficiencies and reach their full potential.

Before deciding to go ahead and invest in a new business solution, many organisations have the same concerns and ask us the same questions. So, to help any businesses interested in starting an ERP journey, below we have answered some of the questions we’re most frequently asked.

1. We’re not a huge business, are ERP systems too big for us?

Lots of small businesses worry about implementing an ERP system, but it’s key to remember that ERP systems can scale up and down in line with your needs. When you’re choosing software for your business, you shouldn’t just think about the current size of your business either, you need to think about your growth plans and ambitions too.

The real question businesses should be asking themselves is; ‘will we be able to scale up with the systems we have today?’. Think about things such as resource availability and how many processes are being carried out manually, and consider whether your current software will be able to meet your future needs.

It’s worth noting that systems such as NetSuite ERP can give your small business a competitive advantage. Being small and staying small but being able to run your business efficiently without the heavy reliance on individuals, which can often be the case in owner-managed businesses, is undeniably advantageous.

 2. How do you know when it’s time to change systems?

Simply put, if your internal systems and processes can be improved, then it may be time to consider the move to an single platform system such as a NetSuite solution. If the delivery of your products/services is being impacted by a lack of automation, inconsistencies and errors or your team is spending too much time on manual and spreadsheet-based tasks, investing in a cloud ERP system will be very beneficial. If you can’t see your business performance in real time without spending time compiling data from various sources, this is another sign that you should change systems.

Sometimes the answer to this question is really obvious and sometimes until you take stock of what you’re doing, you won’t realise just how much you need a new system. You may even wonder how you’ve managed this far with the systems in place.

3. How long does a typical ERP project take?

This is a tough question to answer as all ERP projects are different. Here at OSSM, our clients range from organisations with a few users and basic requirements to clients with larger more complex projects. The simpler projects can be implemented in a short number of weeks, while the larger projects may take months or even years to fully complete.

Best practice would suggest that having the right team in place and the preparatory work completed prior to beginning the project will ensure that time and effort are optimised on both sides. An example of preparatory work includes documents such as system requirements including current processes along with “to be” process mapping.

Another key factor in determining the length of a project is what the internal project team looks like, and time commitment and resource availability is key to a successful outcome. There doesn’t need to be a full-time team dedicated to the project, although we have found this is good practice. However, the skills and experience of your team will come into play. In our business and when advising clients, we would always advocate putting the best team available onto the NetSuite ERP project.

Ultimately, commitment and project buy-in must come from the top down. Ensuring resources have the space and freedom to immerse themselves into the project will be critical, particularly for larger projects.

4. Should we go with a basic implementation first and then add on the bells and whistles? Or should we do it all in one go?

There isn’t a one-size-fits-all solution to ERP implementation and each project is different. Our experience would suggest that a phased implementation is the best way to implement a new NetSuite software. However, if essential processes and requirements must be included as part of Phase 1, then we will ensure that they are in place.

We have seen examples of where ERP projects were sold at a very basic level, but the core requirements of the client have been pushed out to a future phase. In our expert opinion, this is not good practice and while it might make sense from the NetSuite ERP partner’s point of view to keep initial implementation costs down, it doesn’t solve the problem for the client.

5. What skills do we need in-house to ensure a successful project delivery?

We’ve touched on this above, but you should really have departmental representation on your project team. Typically, projects are finance-led, so certainly Finance representation would be the minimum requirement. For larger organisations and more complex projects, we commonly see IT, Sales and Operations representation on the project team too. Apart from skills, experience is hugely important. Having people who know and understand your business and your processes very well is a critical success factor.

6. What does project commitment look like?

Typically, we think project commitment is about having that buy-in from the top and understanding that the individual/s on the project team will be given the freedom and space to put their best foot forward to push the project along internally. Project commitment is an investment in time and effort to ensure a successful outcome.

Project ownership is also critical. We always point out at the outset of an ERP project that we are facilitating the project for our client and that it is ultimately their project. Our job is to project manage and make sure that milestones are met, but the projects with the most successful outcomes are the projects where the client has embraced the ownership of the new system.

7. What are the key ingredients for a successful project?

There are a few points we could make that would point to a successful ERP project, including;

– Having the right project team in place on both sides

– Having a detailed requirements document

– Having a realistic project plan in place

– Understanding the time commitment involved

– Setting realistic expectations from the outset

– Great communication between client and partner

– Top quality project management on both sides

– Understanding the importance of a good set of data – this is often underestimated

8. When is the best time to implement an ERP system?

Often, the best time to start your ERP journey will be dictated by external factors, such as the existing system going “end of life/support” or timing to coincide with other internal projects. However, in all cases, there will usually be a clear cut-off such as a month-end/year-end. If you need any guidance in this regard, a NetSuite ERP partner will help you to determine when you should start implementing new software into your business.

9. Should I go directly to the ERP vendor or should I work with a local partner?

Sometimes, there is a misconception that going directly to the ERP vendor means you will get a higher calibre service or a better price. This isn’t necessarily the case though as a local partner will bring additional value-added services such as industry expertise, local knowledge about taxation, reporting and legislation, as well as being on the ground. Never under-estimate the power of the relationship.  

In the case of OSSM, we work very closely with our clients as we don’t implement hundreds of projects each year. We prefer to focus on the outcome of the project, providing exemplary implementation and support services, and having happy reference clients. Our expert team will become part of your internal team for the duration of the project and we build and develop our working relationship over the long term.

10. It’s a big investment for our company, how do we know we’ve chosen the right ERP partner to implement it?

It can be difficult to know which NetSuite ERP partner you should turn to for assistance, but having reference clients can help you get some comfort from your chosen partner. Reading reviews and testimonials can give you an insight into what it’s like to work with a partner.

Here at OSSM, we always insist on carrying out a pre-implementation scoping workshop before taking an order for NetSuite software too. This gives clients the comfort that;

– We have fully understood their needs

– They are happy working with our team

– They will be left with a detailed scoping document, which becomes the basis for the project implementation, should they decide to go ahead. If they decide not to proceed, they can walk away with the document without having invested in the software.

We think it’s important that the client is comfortable with both the project plan and our team before deciding to go ahead. From our perspective, we also look to get reassurances during the scoping workshop. We hope to satisfy ourselves that;

– We would be happy to take on this project and there is a good alignment between the client’s requirements and our proposed solution

– We feel confident that the client has the resources in place to deliver this project successfully

– There is the commitment and buy-in from the top

On occasion, we have turned down projects in the past where we felt the alignment wasn’t there. It’s far more important for us to do a good job and have a happy client rather than going for the quick win just to clock up another order.

Starting your ERP journey with a reliable NetSuite ERP partner

If you’re looking for a NetSuite ERP partner that can provide you with a comprehensive ERP implementation service, don’t hesitate to contact us at OSSM. We work in partnership with businesses to help them improve their operations with a fully integrated suite of NetSuite cloud software solutions and we can help you to overcome any problems you may be facing. We pride ourselves on supporting clients throughout their ERP journey and as a reliable NetSuite ERP partner, we will help to transform your business and even catapult it to the next level. Get in touch with our team at OSSM if you have any unanswered questions about ERP solutions.

If you are planning to upgrade your ERP system but are unsure where to start, why not get in touch with a member of our team? 

Click below to organise a no obligation call. 

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