Quick answer
Slow-moving stock ties up cash you've already paid out, costs money to store and insure, and loses value the longer it sits. To free it up, identify items that haven't sold in months, then bundle, discount, return, consign or sell them to a clearance buyer. Lenders discount old stock heavily, so clearing it first usually strengthens any application for finance on the stock that actually sells.
Key points
- Every slow line is cash already spent that isn't working for the business.
- An ageing report, sorted by last sale date, finds the problem in an afternoon.
- Clearing old stock at a lower price often beats holding it at full price.
- Lenders value stock conservatively and give little or nothing for aged or obsolete lines.
- The ATO lets you value each item of closing stock by one of three methods, which your accountant can use when stock is worth less than cost.
Slow-moving stock is cash you’ve already spent that isn’t coming back by itself. It also costs money to store and insure, and it loses value the longer it sits. Find it with an ageing report, then clear it by bundling, discounting, returning or selling to a clearance buyer. Lenders give old stock little value, so clearing it usually strengthens any finance application.
Most owners know they’ve got some dead stock. Few know how much, and fewer still have worked out what it’s costing them. This guide is the practical version: how to find it, what to do with it, and how it changes the way a lender sees your business, especially if you’re considering inventory finance against the stock you hold.
Why is slow stock such a cash problem?
When you buy stock, cash leaves the business. You only get it back, with a margin, when that stock sells. Fast-moving stock does that every few weeks, so the same dollars go round and round. Slow-moving stock breaks the loop.
The cost isn’t just the price you paid. Slow stock also:
- takes up space you’re paying rent on, which could hold lines that actually sell
- needs insuring, counting and handling like everything else
- loses value as fashions change, models update, packaging fades or use-by dates approach
- blocks reordering, because the cash you need for this month’s best sellers is sitting in last year’s mistakes
That last one is where owners feel it. The business looks profitable on paper, yet there’s never enough cash to restock the things customers want. Very often the missing cash is on a shelf at the back.
How do you find the stock that isn’t moving?
You don’t need a consultant. Most point-of-sale and inventory systems can produce an ageing report or a last-sold date for each item. Sort it by the date each line last sold and you’ll see the problem in an afternoon.
Then sort your stock into three rough groups:
| Group | What it looks like | What to do |
|---|---|---|
| Fast movers | Sells consistently, reordered regularly | Keep in stock, consider bigger buys if suppliers offer deals |
| Slow movers | Sells, but much slower than average | Reduce reorder quantities, bundle with fast movers, review price |
| Dead stock | Little or no sales for longer than your normal reorder cycle | Clear it: return, discount, consign or sell to a clearance buyer |
Look at the dollar value in each group, not just the item count. Ten slow lines that cost a few dollars each don’t matter. Two dead lines worth $30k between them do.
Our guide on stock turnover and business loans explains how to turn the same report into a simple turnover figure that lenders understand.
What are the best ways to turn old stock back into cash?
There’s no single answer, but the options run roughly from “keeps the most margin” to “gets the cash fastest”:
- Return it to the supplier. Some suppliers accept returns or swap old lines for new, especially if you’re a regular buyer. Ask before you discount.
- Bundle it. Pair slow items with fast sellers or create gift packs and kits. It moves stock without cheapening your main lines.
- Move it to where it sells. A different store, a different channel (online marketplace, wholesale, trade customers) or a different region can find buyers you don’t reach.
- Discount it, deliberately. A planned clearance with a clear end date works better than a permanent sale rack.
- Consign it. Another business sells it for you and pays you when it sells. Check the paperwork, because the PPSR’s guidance for retailers notes that consignment arrangements can fall under the PPSR rules and may need registering.
- Sell to a clearance buyer. Specialist buyers purchase excess stock in bulk. You’ll get the lowest price, but the cash arrives quickly.
- Donate or write off. For truly unsaleable items, clearing the space has value of its own. Your accountant can advise on the tax treatment.
The hardest part is emotional: accepting less than you paid. But a dollar recovered today and spent on a line that sells three times this year is worth more than a dollar you hope to recover next year.
How do lenders look at old stock?
Lenders don’t value stock the way you do. They ask, “What would this fetch if we had to sell it quickly?” That’s why stock finance providers advance only a portion of stock’s value, and why they look closely at ageing reports.
From a lender’s point of view, slow stock:
- gets a low or zero value when working out how much they’ll advance against inventory
- raises questions about buying decisions, especially if the dead lines are large
- can make your margins look better than your cash flow, which lenders notice when they compare your financials with your bank statements
The flip side is good news. An owner who can show a recent clearance, a clean ageing report and fast-moving core lines looks like someone in control of their stock. That’s exactly who lenders want to fund.
If you need cash now to restock the lines that sell, check your options in about a minute, and mention that you’re clearing old stock. A real person will factor that into the conversation.
What does the ATO say about stock that’s lost value?
At the end of each income year, businesses under the general trading stock rules value their closing stock, and the ATO explains that an increase in stock value over the year is counted as assessable income, while a decrease reduces it. Its general trading stock rules page covers the stocktake and opening and closing values.
For the closing value, the ATO’s page on valuing trading stock lists three methods: cost, market selling value and replacement value. You can choose a different method for different items, and a different method each year. For stock that’s worth less than you paid, that choice can matter, so talk it through with your accountant before 30 June. Our guide on whether stock bought with a business loan is tax deductible covers the borrowing side.
Illustrative example: a homewares and gift store
Illustrative only. A homewares store finds it’s carrying about $60k of stock at cost that hasn’t sold in more than six months, mostly seasonal decorations and a range of glassware from a supplier that has since changed its designs. Meanwhile, it keeps running out of its best-selling candles and linen.
The owner returns part of the glassware to the supplier in exchange for credit on new lines, bundles the rest into gift sets, and runs a two-week clearance on the decorations. About two-thirds of the slow stock is turned back into cash or credit within two months. The owner then applies for a modest unsecured facility to buy fast-moving lines ahead of the busy season, with a clean ageing report and a clear explanation of the clearance. The application is straightforward, because the stock story makes sense.
When does borrowing for stock make sense?
Borrowing to buy stock works best when:
- the lines have a proven sales history
- the purchase is timed for a peak, such as Christmas, end of financial year or a seasonal rush
- a supplier offers a genuine bulk or early-payment deal
- slow and dead stock has already been dealt with
Common options include working capital loans and unsecured facilities typically from $5k to $500k, sized on turnover and bank statements, or property-secured business loans from $20k to $5m for larger stock builds. Retailers can find more on the retail shop loans page.
Cleared the shelves? Now fund the stock that sells
Once you’ve freed up the cash tied in old lines, you’ll know exactly which stock earns its place, and that’s the best possible starting point for funding more of it. If there’s still a gap before your next peak, we can help you size it properly.
Our short form takes around 60 seconds. There’s no credit check when you first enquire, and we don’t hand your details to multiple lenders, so you won’t get a flood of calls. A real person reads it, understands what’s happening with your stock, and calls you. Please be accurate about turnover and how much you need, so we can line up the right option first time.
Frequently asked questions
How old does stock have to be before it's 'slow-moving'?
It depends on your industry. A florist or grocer thinks in days, a fashion retailer in seasons, a hardware wholesaler in months. A useful rule is to flag anything that's sold noticeably slower than your average line, or hasn't sold at all for longer than your normal reorder cycle.
Will lenders lend against old stock?
Usually not much. Lenders value stock at what it would fetch in a quick sale, not at your retail price. Aged, seasonal or specialised items may be given little or no value, which is why clearing them can tidy up your application.
Is it better to discount stock or hold out for full price?
Often discounting wins. Holding stock costs money in storage, insurance, shelf space and the cash you could be using elsewhere. Selling below cost hurts, but buying fresh stock that sells quickly with that cash may earn far more over the year.
Can I write down stock that's worth less than I paid?
The ATO allows each item of closing trading stock to be valued at cost, market selling value or replacement value, and you can choose a different method for different items each year. Your accountant can advise on the right method for stock that's lost value.
Should I borrow to buy more stock if some lines aren't selling?
Only for lines with proven demand. Borrowing to restock fast sellers can make sense, especially before a peak. Borrowing while old stock clogs the shelves usually makes the cash problem bigger, so clear or reduce the slow lines first.