The velocity of money is a crucial element in a successful business model.

Inventory reduction at the right time can increase the velocity of your money.

A: We have 100 widgets with a cost of $1,000.  After 1 year we sell them at $2,000.  Our gross profit is $1,000.  Our net profit, less storage, advertising and sales commissions is $850.00

B: We have 100 widgets with a cost of $1,000.  We sell the widgets in 3 months for $1500.  We take our $1500 and buy newer, faster widgets that are currently being advertised heavily by the manufacturer.  We sell these widgets in 3 months for $2000.  We take our $2,000 and buy more of the newer, faster widgets and sell them for $2500.  Once again, we buy more and receive a volume discount, so we sell these widgets for $3500.00 in 3 months.  Our advertising costs are reduced because the manufacturer is currently advertising heavily.  Our staff is more productive due to inventory turnover.

Sometimes it is better to face the ugly truth about older inventory. 

The longer you store it and the more times you touch it, the more it will cost you in the long run.