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Stock Management Guide for SMEs | Rapid Cash

BY Rapid Cash
08 Aug 2022

Stock Management Guide for SMEs

Stock management can be an extremely complex discipline with a range of moving parts. From sourcing raw materials to holding inventory, and building a distribution network to financing your entire supply chain, there are a lot of considerations to be made that often are heavily influenced by external market factors.

However, there are ways for SME owners to become more efficient in managing their stock, from practical considerations to adopting the right technology and tools, and even leveraging external finance to make cash injections at crucial moments.

Ultimately, the businesses that manage inventory properly and are always able to meet customers’ demands could edge out over their competition and properly capitalise on demand spikes – which is why in this blog we’ll share with you our top tips for stock management that any small business could look to utilise.

If you are looking for more general tips on the management of business costs then you can find our tips and insights in our blog Business Costs and How to Manage Them.

Inventory Management

Getting familiar with and being in-the-know about your stock levels is the essential starting point for good stock management – and sourcing adequate working capital to grow and maintain these stock levels is critical. Some of the key elements of that inventory managers should be aware of are:

  • Current stock levels broken down by product.
  • Your historical sales records split by product, factoring in seasonality.
  • Your options for reserve stock.
  • Current demand and how this is projected to grow and evolve.
  • A whole host of considerations around how long you can hold stock for, expiry dates of products if relevant, and the exact impact of holding inventory on your business’ bottom line.

With so many moving parts, perhaps the most efficient way of managing inventory could be to embrace automation and utilise a digital inventory management platform to remove a lot of the manual work here and generate actionable insights quickly.

Manual Stock Counts

Despite technology offering ease and speed, you may want to ensure that you regularly take manual stock checks. Manual checks provide an opportunity to confirm any data you might have from your stock management software, but also provide a unique opportunity to identify missing and damaged stock while taking note of any leftover stock you might have.

With this information, you may be able to make better informed decisions about your stock and can adjust your business activity (such as your advertising) to accommodate situations in which you might be missing stock, over stocked, or left with obsolete stock.

Drop Shipping

Drop shipping is an order fulfilment method that some SMEs are utilising in order to streamline their stock management by minimising the steps required from production to product delivery.

What is Drop Shipping?

Drop shipping removes the need for storage units and warehouses by having your products shipped directly from the manufacturers to your customers. By eliminating the need for ‘middle-men’ the delivery process, drop shipping simplifies stock management; you may only need a laptop and internet to access stock around the world.

One potential advantage of drop shipping could be the opportunity to reinvest any overheads typically associated with your inventory into your distribution and manufacturing funds; thereby improving in these areas. However, drop shipping simply isn’t for everyone- and for businesses that are aiming big and looking to generate large spikes in demand, having that inventory in a warehouse and the option to work with various distributors may be a more attractive prospect.

Plan and Standardise Your Processes

In order to establish a stock management method that works consistently, you should put careful consideration into what method of stock management works best for your business. Take time to plan, looking at factors like staff numbers, the space in which you operate and store your stock, and demand patterns.

Perhaps equally as important is being clear with responsibilities. Who in your business is responsible for the day-to-day handling of inventory? Who, from the marketing team, communicates activity that may precede a spike in demand? Having clear lines of communication could benefit any small business.

Efficiently identifying the critical pillars that mark the foundations of your stock management plan could enable you to standardise your processes; optimising them for efficiency and building a stock management infrastructure that scales. This way, when changes happen or new requirements come to light, you can build up from the fundamental process you have created without having to make and assimilate your staff to major changes.

Build relationships

A valuable tool in every aspect of business operations, the ability to build rapport with your suppliers as well as your clientele and customers could leave you in a more beneficial position should something unexpected happen with your supply chain or stock.

Clear communication with the people and companies in your supply chain may quickly impact your stock management for the better, as well as giving you the opportunity to monitor the performance of your suppliers better. Maintaining these external relationships could be particularly important amidst the fast-moving global supply shortages.


Proper organisation of your stockroom will save you a lot of time and make stock management considerably easier. With an organisational system in place that is appropriate for your products, you may find that processes like stock count and even simply locating stock when you need is quick and simple.

Think about the layout of your products on your stock room shelves and what pattern your stockroom should follow to be able to quickly locate items when needed. For example, if you use a code label system, think about ordering your stock in a vertical pattern in code order so locating an item is as simple as identifying its code and its column.

Other things to consider in your stockroom organisation include health and safety signage and tape, good lighting and temperature control, robust shelving that can handle the required weight.

Stock Management Software

Like many tasks today, stock management is made easier with the right application of an appropriate piece of software. This is another instance where organisation and planning will help you to identify what your business needs. Inventory management software can come in a variety of niches, so it’s wise to put some research in to ensure the one you choose will help you to the highest standard.

Stock management software could help you with the management of stock funding, asset tracking and management tools, product identification and can be used for service management in service-oriented industries.

Grow with Invoice Financing

If you’re an SME looking to expand your stock and begin serving a wider audience, an invoice financing-styled solution might be a good option for your business. NatWest Rapid Cash is an invoice financing tool that could allow your business to unlock the funds from your unpaid invoices, and offers a unique stock finance solution.

Waiting for payments is one of the biggest struggles for SMEs looking to expand operations. With a finance facility of up to £1m, your business could put the funding otherwise tied up in unpaid invoices into businesses activities that count; such as expanding your inventory or upsizing your warehouse/storage. It’s a working capital solution that’s designed to help eligible small businesses grow.

Fully integrated with accountancy packages, Rapid Cash offers flexibility by allowing you to borrow only against outstanding invoices of your choosing. You can receive a cash advance that allows you to mobilise your money without having to wait 30-120 days for the invoice to be paid. If this sounds like a solution that could benefit your business, read more about our product.


To be eligible for Rapid Cash you must be trading for more than 6 months, have an annual turnover of at least £100k and either be a Limited Company or Limited Liability Partnership in England and Wales. Additionally, you need to invoice other businesses and use one of the following digital accounting software: Xero, Quickbooks, Sage 50, Kashflow, FreeAgent and Netsuite.

Security and guarantee required. Product fees may apply.

Rapid Cash

Rapid Cash offers a modern line of credit unlocked by your unpaid invoices, offering greater flexibility and automation than most traditional finance facilities.