September 21, 2026

Inventory Is Cash: Why Distributors Need Better Visibility

For most distributors, inventory is one of the largest assets on the balance sheet. But it is also one of the most misunderstood assets.

A warehouse full of product can seem reassuring: Orders can be filled, customers can be served, and purchasing has a buffer against supplier disruptions. But from a financial perspective, every pallet, case, and item sitting on a shelf represents cash that has already left—or will soon leave—the business.

Not all of that inventory is equally valuable. Perhaps more importantly, not all the cash it represents is equally recoverable.

Some inventory might be sitting in the wrong warehouse, while some more is becoming obsolete or approaching an expiration date. And some might exist in the system but not actually be where the system says it is, or not be there at all!

So, instead of asking, “How much inventory do we have?”, the better question is, “How much of our inventory is actually working for us?”

For distributors, answering that question requires better visibility—not just into inventory quantities, but into demand, location, age, movement, availability, cost, and risk.

Inventory visibility is the ability to accurately see what inventory you have, where it is, how quickly it is moving, what it is worth, and where it may be at risk. For distributors, that visibility directly affects working capital because every item purchased represents cash invested until the inventory is sold and payment is collected.

The inventory paradox: Too much and not enough at the same time

One of the most frustrating inventory problems is having too much inventory overall while still experiencing stockouts.

One location might have too much inventory while another repeatedly runs short.

The financial consequences extend well beyond the cost of the products themselves. Excess inventory ties up working capital and consumes warehouse space. Shortages can create expedited freight, emergency purchases, partial shipments, lost sales, and dissatisfied customers.

The company can end up paying twice: Once for inventory it doesn’t need and again for the consequences of running short on the inventory it does need.

Companywide visibility changes the conversation from “Do we have enough inventory?” to “Do we have the right inventory in the right place at the right time?”

Inventory aging: When stock becomes trapped cash

Finance typically knows the value of inventory. But knowing its value without knowing its age and velocity can hide an important cash-flow problem.

Slow-moving stock is a cash flow issue. As inventory ages, the probability of recovering its full expected value can decline. Products can become obsolete, customer preferences can change, or replacement models can arrive, making your existing inventory worth less than you paid for it.

Visibility into inventory aging and turnover allows finance, sales, purchasing, and operations to address the problem sooner:

• Should purchasing reduce future orders?
• Should sales move excess product through another customer or region?
• Should inventory be transferred between locations rather than replenished?

The earlier those questions are answered, the more options the distributor has.

For perishable and expiring inventory, the clock is literally running

For food, beverage, pharmaceutical, chemical, medical supply, and other distributors handling time-sensitive products, inventory has another dimension: Remaining useful life.

A refrigerated product isn’t simply 100 units on hand. Those 100 units might consist of several lots with different expiration dates. Likewise, pharmaceutical expiration dates represent the period during which the product is known to retain its strength, quality, and purity when stored according to its labeled conditions.

That means visibility needs to extend beyond quantity and location to information such as lot, expiration date, storage requirements, and remaining shelf life.

This is where practices such as FEFO—first expired, first out—become important. Instead of simply shipping the oldest inventory received, the organization prioritizes the inventory that will expire first.

The financial implications are substantial even without an outright stockout. A distributor that discovers aging product too late might have fewer options to transfer it, sell it, return it (where permitted), or otherwise avoid a write-off.

For refrigerated and frozen products, visibility also has a physical dimension. Knowing that a product exists isn’t enough if improper handling or storage has compromised it. In pharmaceutical distribution, FDA guidance explicitly ties product stability to labeled storage conditions, including temperature, humidity, and light exposure. These factors also add to storage, transportation, and regulatory compliance costs.

In these environments, inventory visibility becomes integral to product quality, traceability, compliance, and risk management.

Inventory accuracy: What if your inventory records are wrong?

Inventory accuracy is another problem that distributors don’t always connect directly to working capital.

If the system says there are 50 units in a bin but only 42 are physically present, every downstream decision based on the 8 nonexistent units is potentially wrong.

Sales might promise them. Planning might assume they’re available. Purchasing might decide not to replenish them. Finance might include them in inventory valuation.

How barcodes, RFID, and cycle counting improve inventory accuracy

Technology can help close the gap between physical inventory and system-reported inventory.

Barcode scanners and handheld devices can capture product, lot, serial, package, location, receipt, pick, and movement information at the point where work occurs rather than relying on later manual entry.

RFID can take this further. Because RFID doesn’t require the same line-of-sight scanning as conventional barcodes, tagged products, cases, or cartons can be captured automatically as they move through parts of the supply chain. GS1 US notes that RFID can improve real-time visibility into inventory levels and locations and increase the efficiency and accuracy of inventory tracking.

But technology alone doesn’t eliminate the need to count inventory.

Regular cycle counting can verify selected portions of inventory throughout the year instead of relying exclusively on a disruptive annual physical count. The real value isn’t simply discovering discrepancies. It also helps identify patterns. If the same warehouse, item category, process, or location repeatedly produces discrepancies, the distributor can investigate the operational cause rather than continually correcting the number.

Inventory visibility is a cross-functional responsibility

Perhaps the biggest mistake is treating inventory as solely an operations responsibility.

Each department needs a different view of the same inventory, a view that shows them what they need to perform their responsibilities.

A CFO might want inventory value, turns, aging, excess stock, and working-capital trends. Purchasing needs demand, lead times, incoming supply, and supplier performance. Warehouse managers need quantities, locations, picks, movements, and count accuracy. And sales needs reliable availability information before making commitments.

Visibility helps distributors recognize that inventory isn’t merely something stored in a warehouse. It is cash moving (or not moving) through the business.

How Business Central improves inventory visibility

Microsoft Dynamics 365 Business Central brings inventory together with purchasing, sales, warehousing, planning, and financial information. For distributors that require more detailed traceability, Business Central supports serial, lot, and package tracking, as well as expiration dates, and can prioritize items with the earliest expiration dates for outbound transactions using FEFO.

Business Central’s mobile app can scan 1D and 2D barcodes for serial, lot, package, journal, and warehouse activity information, helping capture data closer to where inventory is actually handled. Power BI can extend that foundation with dashboards and analytics that help management examine inventory value, movement, trends, and other operational and financial measures.

But technology only enables this visibility.

The real advantage comes from giving each department a common view of inventory and the ability to recognize where cash is being trapped before the problem shows up in the financial statements.

Put your inventory and your cash to work

Inventory shouldn’t just sit on the balance sheet. With better visibility into what you have, where it is, how quickly it’s moving, and where it’s at risk, you can reduce excess stock, improve inventory accuracy, and make better working-capital decisions.

ArcherPoint by Cherry Bekaert can help you optimize Business Central to improve your companywide visibility by connecting inventory, purchasing, warehousing, sales, and financial data, giving your teams the visibility they need to put more of your inventory (and your cash) to work!

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