Most business owners can tell you their revenue, wages bill, and how busy the team feels. Far fewer can tell you how much cash is sitting on shelves.
Stock is often the largest and least questioned use of cash in the business. This isn't because it is badly managed, but because it has slowly become more complex than the business can and should comfortably fund.
Stock complexity builds quietly and rarely shows up as a giant obvious problem, but I need you to trust me.
Let's start with a simple example.
→ Why Stock Complexity Builds Faster Than You Expect
→ Complexity Always Has a Cost to Cash
→ When Complexity Turns You into Everything for Everyone
→ What the Best Businesses Understand About Simplification
→ Fewer Options Often Improve the Customer Experience
→ The Real Question Business Owners Need to Answer
→ How CFO Dynamics Helps Improve Stock Management
→ A Final Thought on Working Capital
A business sells men's t shirts. It offers:
That creates 500 possible combinations. Even if you carry only one of each, your cash is now spread across hundreds of individual decisions.
Layer on season changes, customer specific requests, near identical alternatives, and discontinued lines that never quite disappear... it becomes very easy for warehouses and showrooms to fill up without anyone making a poor decision.
Every additional option you carry increases the amount of cash tied up in stock. It also creates secondary effects that are easy to underestimate.
More complexity typically means:
None of these are fatal on their own. Together, they will quietly starve the business of cash. The critical point is this:
Complexity must be funded. If your margins are not strong enough to support the level of choice you are offering, stocking becomes a permanent working capital drain.
As product ranges expand, many businesses drift into trying to serve too many customer types at once. The intention is almost always good.
The outcome rarely is.
Stock sits longer. Cash gets trapped. The business feels busy but financially tight.
Decision making becomes harder for staff and customers alike, not easier. More choice does not automatically mean better service.
Some of the strongest businesses in the world have made deliberate decisions to simplify their offering.
Southwest Airlines built their model around a single aircraft type, the Boeing 737. That decision simplified maintenance, training, and the spare parts they needed to hold.
Less variation meant less inventory, lower holding costs, and better cash outcomes. It was not just an operational choice. It was a working capital strategy.
In Australia, Kmart went through a similar shift under former CEO Guy Russo. They reduced the number of brands and suppliers and became far more deliberate about what they offered customers. One white t shirt. One black t shirt. This simplification improved stock movement, strengthened margins, and delivered a better customer experience.
In both cases, simplification created strength, not limitation.
Many business owners worry that reducing choice will hurt sales. In practice, the opposite is often true.
Customers decide faster.
Staff sell with more confidence.
Stock moves more predictably.
Cash returns to the bank sooner.
Simplicity reduces friction inside the business and for the customer at the same time.
The goal is not to eliminate complexity entirely. Some businesses do genuinely need it. The real question however is whether the complexity in your business is:
If it is not, it quietly erodes cash every single day.
From a working capital perspective, days stock on hand is one of the most powerful levers available. Reducing unnecessary complexity improves stock turns, releases cash and reduced operational stress without needing to chase more sales.
At CFO Dynamics, we help businesses look at stock through a financial lens, not just an operational one. We analyse SKU level profitability, identify where complexity is not paying its way, and help owners redesign their offerings so it is simpler, more deliberate, and far more cash efficient.
This work is particularly effective in:
In these environments, stock decisions have an outsized impact on cash flow. Stock simplification is not a gut feel exercise. It is a financial decision.
Even though stock is only one part of the working capital puzzle, it is one of the most controllable. This concept sits inside a much broader framework around cash creation and working capital improvement.
We are building something deeper around this in the background. If this topic resonates with you, and you want to go further, reach out.
Sometimes the fastest way to improve cash is not to add more.
It is to simplify what you already have.
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