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Critical Facts CFOs Need to Know Before Reducing Inventory

Inventory Optimization & Management  

In an effort to free up cash, many financial managers are eager about reducing inventory. However, taking steps to reduce inventory without being fully aware of the context can lead to disastrous outcomes.

 

CFOs need to be aware of two key points about inventory: first, inventory serves a purpose, and second, there is a "right" amount of inventory needed to meet demand.

 

Here are some important steps that company finance teams, operations managers and CFOs can take to avoid costly mistakes resulting from incorrect inventory reduction.

What should a CFO know about inventory and inventory turns?

Inventory, as a large item on the balance sheet, is always an important concern for a manufacturing company and its finance team. Most financial managers would like to see inventory reduced to free up cash for other purposes.

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