Beer Wholesaler Inventory Carrying Cost Calculator
The cost of your inventory is shown on the balance sheet. This is the amount you paid the supplier, plus freight charges.
But the hidden costs, the inventory carrying costs, aren’t clearly visible. And these expenses are huge.
Some fast facts on inventory carrying costs, from REM Associates management consultants:
- 65% of companies don’t calculate inventory carrying costs
- The ‘rule of thumb’ for inventory carrying costs is 25% of cost on hand
- Cost of capital is the biggest driver of carrying costs
The first step to manage inventory carrying costs is to identify and quantify the expenses.
Below is a template you can use to calculate your inventory carrying costs:
Once you identify these costs and make them visible, they become easier to manage.
For example, how much do you have in breakage or out of code expense? How about destruction fees for getting rid of old product?
Measuring, managing and reducing these carrying costs may go a long way towards improving financial results in your beer business.
Do this next:
- Download the Beer Wholesaler Inventory Carrying Costs Calculator
- Learn more about our financial education programs for beer wholesalers
