2008 is showing all of the hallmarks of being a difficult year financially, and for this reason, having control over your cash flow is absolutely vital. Managing stocks in an economic crisis is one of the best possible defenses that you can take during the credit crunch. By monitoring the liquidity of your cash flow at the earliest stages, you will have better luck in managing stock levels and inventory control. The first sign of problems is a reduction in your net profits. The last possible sign of problems is when you hit a severe deficiency in cash flow. Managing your stock levels should be capable through sound accounting procedures which will produce financial control information regarding your stock levels, creditors, debtors and financial investments which will provide you with early warning systems of any impending problems involving cash flow.

Larger businesses have accountants that produce financial information, and who can also review and monitor your financial influences within your business. Smaller businesses often do not have the necessary financial controls and financial details which put the business at risk. This is because as the credit crunch begins to tighten, the businesses that are at the most risk are those that cannot accurately and efficiently manage their liquidity until it is much too late.

All stocks have to be financed and funded either from working capital of the business entity, or from external sources of funding. Should the business have no external funding costs, then the high stock levels may allow the company to better obtain supplier discounts when making purchases. When the value of the stock has to be financed, then it becomes more important that the stock levels be managed in order to use up the smallest possible amount of financial resources.

Managing stocks in an economic crisis is not just about reducing the volume of your stocks, but also about having just enough for the level of sales without any stock shortages. Businesses that employ accountants generally set a stock policy, but small business owners have to handle this duty their own selves.

The first step when it comes to managing stocks in an economic crisis is to carry out an effective stock audit through physically taking stock and then producing financial statistics showing the sales volume for each should produce figures for each stock so that they may be monitored constantly. This can also provide indications of abnormal stock losses to ensure that stock is protected at all times.

With stock levels and turnover information, policies can be put in place that will allow the stock and investments to be managed properly, eliminating or reducing threats or possibilities where the stock is not being handled properly. 2008 is showing all of the hallmarks of being a difficult year financially, and for this reason, having control over your cash flow is absolutely vital. Managing stocks in an economic crisis is one of the best possible defenses that you can take during the credit crunch.

Photo Credits: 1

Originally posted 2008-11-05 05:46:14. Republished by Old Post Promoter

Related Posts

• Do You Have to be Thrifty? As the economy continues its upheaval, the word thrifty seems to be on many people's minds. Is it absolutely necessary to be thrifty in times of economic uncertainty? There are many schools of thought on the subject, and while at first glance, it may seem like the only economical choice,......
• Book Review: You Don't Have to Be Rich By Jean Chatzky Can a book about lowering your financial expectations be any good? We were intrigued by the premise of this book and decided to give it a try. It was a bit surprising in some places, and a little disappointing in others, but overall it was a very interesting read that......
• Running Out of Time? How to Catch Up Financially Before it is Too Late Whether you are pushing thirty and trying to get your first home or your retirement is staring you in the face, there are times when you may feel as though you’ve run out of time financially. We don’t always make the best decisions when it comes to saving money and......
• Does Insurance Really Matter When it Comes to Personal Finance? Most of us look at insurance premiums as a big drain on our finances. Insurance policies do not come cheap, but they may be essential. In many ways, you can look at insurance as a way of avoiding financial failure in the years to come. While you can’t buy a......
• Using Credit Cards to Make More Money When it comes to credit cards, most of us think of them as a way to get things we really want right now. We may not actually "need" these things, but we sure do want them. Whether it's a new couch, a new stereo or even a new wardrobe, we......

Related Websites

• MJNA - Medical Marijuana Inc. Has come a long way and was sitting at 0 for a while and now trades at 6 cents a share and shows signs of long term growth.  MJNA has just devloped a financial management system that will ensure local, state and federal governments receive their tax revenues in a......
• Penny Stocks Alert â Hot Stocks Alert for Pphm, Trdy, Cksw Royal Palm Beach, FLA — MobiWire’s “Stock Alert Watch”: Peregrine Pharmaceuticals, Inc. (Nasdaq: PPHM), Trudy Corporation (OTCBB: TRDY) and ClickSoftware Technologies Ltd. (Nasdaq: CKSW) To Receive FREE Stock Alerts specially formatted for you mobile phone no matter where you are, please see below or go to http://www.mobilepresswire.com for more details.......
• The Economic Crisis And Recency Bias With the current economic crisis in full swing, it's easy for us to fall into the recency bias trap.  In psychology, the recency effect is the tendency to remember more recent events or observations more vividly and give recent information more weight than historical information. Unfortunately, this recency bias could......
• Book Review: Common Sense On Mutual Funds I began my personal finance education by reading Suze Orman's "The Money Book for the Young, Fabulous & Broke" to get a good overview as I began my personal finance journey. I then read two books on investing in the stock market. William Bernstein's "The Four Pillars of Investing" and......
• Writing a Working Business Plan Writing a Working Business Plan By Trina Newby Many women are so confused by the words - "Business Plan". What is it? Who do I show it to? Do I really need it? What is it really going to do for me? A business plan is a written blueprint for......

If you liked this article, vote for it on del.icio.us and stumbleupon.


Categories:

Cash Flow, Money, Personal Finance, Stocks, credit, stock market

Tags:

accounting procedures, better luck, business entity, credit crunch, debtors, early warning systems, economic crisis, external sources, financial details, financial investments, hallmarks, impending problems, inventory control, liquidity, net profits, sources of funding, stoc, stock levels, supplier discounts, working capital