How do I show a lender my distributor’s inventory is saleable?

A lender looks at inventory as possible security, and security is worth only what it could be sold for. So begin by making the stock easy to read. Provide a report of items on hand, with cost, last sale date and quantity sold over recent periods. Group it into fast, steady and slow. Be open about the slow group, and explain your plan for it: promotions, returns to the supplier or a write-down.

Back the report with a recent physical count and a note on how often counts are done. Lenders worry when records and shelves disagree. Include your record of write-offs and returns, which shows you recognize problems early.

Explain the customers behind the stock. Items bought for regular accounts are more convincing than special purchases for one job. If suppliers will take back unsold items, say so and show the terms in writing. Invite the lender to tour the warehouse, since a clean, organized site speaks louder than a report. Your accountant can help you present the figures consistently with your statements. Keep the story simple and the numbers traceable, and offer to answer follow-up questions the same day so the lender sees how closely you watch the stock.

Key takeaways

• Group stock into fast, steady and slow movers, with last sale dates for each item.
• Provide a recent physical count and a record of past write-downs and returns.
• Show written supplier return terms for unsold items.
• Invite the lender to visit the warehouse and see the stock.