How Can I Pay Down Debt When I'm Loaded With Excess Inventory?

closeout brokers purchase large quantities of inventory and closeouts

If you run a business and you have debt, you’re not alone. In a Gallup poll, 36 percent of small business owners said they were uncomfortable with how much debt their businesses carried. If you have too much inventory it should be sold off to overstock and liquidation buyers to generate cash. If you have liquidation stock for sale but are unable to sell it, you may not be looking in the right places. Search for closeout websites, wholesale liquidators and other companies that buy closeouts. Forty-nine percent of all business owners said they find it extremely difficult to manage their current debt. Surplus inventory can often be sold to generate cash flow and make room in the warehouse while bringing in cash to pay expenses. Too much inventory is cause for concern when cash flow is also restricted and debt is high. Closeout brokers and liquidation buyers understand these situations.

While you might have to take on debt at times to scale your business, looming debt can squeeze the joy out of being an entrepreneur. If your overstock inventory is being sold off regularly and you do not have excessive amounts of liquidation stock for sale, you should be generating enough extra cash to help. But if you always have too much inventory in the warehouse, you probably need to make contact with more inventory liquidators or other companies that buy closeouts. Businesses with excessive outstanding debt may experience decreased cash flow due to interest payments. In addition, they may have difficulty accessing additional capital, and depending on the business structure, may even experience a negative impact on their credit scores. Liquidation buyers can be a huge help to these struggling businesses because you can sell your old inventory in exchange for fast payments. To maintain your operations, there are expenses like payroll and rent that you must consistently afford. However, there are also costs that you can cut. For example, perhaps you pay for a weekly catered breakfast, or use marketing services that aren’t generating leads. Until you pay off your debt, try cutting costs when you can to save money.

It can be difficult to run your business and focus on budgeting. But you must learn how to spend responsibly. That means having a budget for every business function—and sticking to it. This is the key to keeping debt in control. The same goes for liquidating inventory and keeping a lean warehouse because liquidation stock for sale just sits in the warehouse taking up valuable space. This is why so many 3PL warehouses are closing and downsizing. Having too much inventory is generally a bad thing if you also have high levels of debt and not enough cash flow.

A simple solution for your company may be to employ a proven budgeting method. Zero based budgeting guarantees your expenses are justified each accounting period through a clean-sheet approach. In its simplest terms, zero-based budgeting means that income minus expenses must equal zero at the end of the period. This is another good reason to sell unwanted inventory and overstock because it helps you get back to that net zero effect. Companies that buy closeouts can help you do this because there won't be any open receivables. Since inventory liquidators pay cash immediately, you will make a quick exchange of inventory for money, you will get rid of all your liquidation stock for sale, and will be helping your budget all at the same time. You can’t just tell lenders to lower rates. But if you’ve been making consistent monthly payments on an installment loan and your business is doing okay, they may be willing to give you a better rate. For business credit card debt, you could move balances to new credit cards that offer 0% intro APR or free balance transfers. You must give your monthly business debt payments the full priority. Paying off the largest amount with high interest should be the first target debt that you need to pay off. Companies that liquidate inventory may be willing to take merchandise off your hands in exchange for one lump sum of money. This can be done through closeout websites, liquidation companies and excess inventory buyers who sell into the secondary discount market. These funds can then go toward paying down debt.

When the first largest debt is paid off, you can shift your focus and apply the same method to the next highest debt. As each debt is paid off, your total monthly payment amount will be gradually reduced. But you may keep the pace intact by making extra payments to the existing debts. At the same time you will see a reduction in inventory as you liquidate merchandise and clear up warehouse space. If you are leasing storage space in a 3PL warehouse you can downsize or close your 3PL because you no longer need so much warehouse space.

You can’t hide from your business debt or ignore them. But, you can take steps to get it controlled. So, if you are having difficulties to handle small business debt, you may implement these tips to eliminate your business debt and get your business back on track. The key is to reduce inventory buy selling dead stock to liquidation companies that work with surplus buyers and closeout wholesalers.
Merchandise USA is a closeout liquidator specializing in overstock, closeouts and excess inventory. We have been buying and selling closeouts of toys and home accessories for 37 years.