How do I check a lumber yard’s specialty and treated wood inventory?
Walk the yard and inspect the specialty and treated wood yourself, looking at condition, storage and how long each lot has sat. Ask which items are special orders or leftovers from a job, and how they appear in the inventory records. Slow-moving specialty stock can tie up money.
Specialty wood and treated wood behave differently from everyday stock. Treated lumber may be stored outdoors, and specialty species may be kept in covered areas. Look for warping, checking, staining and mould. Ask how the pieces are stacked and covered, and whether the storage protects them. Condition affects whether the stock can be sold.
Then ask about age and demand. Which lots have sat the longest, and why were they bought? Ask for a report that shows when items last sold. Special orders bought for a customer who never collected are a common leftover. Check whether those items are in the inventory total, and how the seller has treated them in the books.
Look at supply and terms. Who supplies the specialty items, how reliably, and could you get the same range? Ask whether any of the stock is on consignment or financed by a supplier, since that changes what you actually own. Your accountant can review how the stock is recorded, and your lawyer can confirm what transfers and what is still owed. Finally, ask whether customers or contractors reserve specialty items in advance, since reserved stock is more predictable than stock bought on hope.
Key takeaways
- Inspect condition and storage of specialty and treated lots with your own eyes.
- Ask for a report of when each item last sold.
- Check whether any stock is on consignment or financed by a supplier.
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Sources
This answer is checked against primary sources. Links were last confirmed on the dates shown.
- 01Business Development Bank of CanadaGovernmentWhat is inventory
- 02Business Development Bank of CanadaGovernmentHow to conduct due diligence when buying a business
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