Problem · Capital tied up in inventory
The warehouse is full. The account doesn't.
Every item on the shelf is paid money that hasn't come back yet. Work out how long your stock lasts and how much capital sits above your target.
Quick calculator
How many months are sitting in the warehouse?
Inventory value at cost, monthly cost of goods and the coverage you want to hold on purpose.
Inventory coverage
6 Months
about 182 days in stock
Lie above your target coverage 90.000 € capital. Check the items with the longest days of supply first.
Coverage = inventory value ÷ cost of goods per month
Assumptions and limits
- The calculation covers the whole warehouse. A good average can hide individual slow movers.
- Seasonal goods skew the monthly average. High stock before the season is intended.
- The right target coverage depends on lead times and minimum quantities; it is your decision.
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How you'll notice
The goods are here. The money for it is missing.
- There's no money for the next order, even though the warehouse is full.
- Some items have sat for months while bestsellers are sold out.
- Minimum quantities at the supplier lead to orders that last much longer than planned.
Understand the causes
Like money ends up on the shelf.
- 01
Purchasing by minimum quantity
- How you'll notice
- Orders last half a year, although three months were planned.
- Why it happens
- Tiered prices and minimum quantities make large orders cheaper per unit, but expensive in capital.
- What helps
- Weigh the volume discount against the months of tied-up capital before you order the larger quantity.
- Limit
- With long lead times, higher stock is unavoidable.
- 02
Slow movers go unnoticed
- How you'll notice
- Total stock looks normal, while individual items last for years.
- Why it happens
- Stock is only viewed in total, not per item.
- What helps
- Calculate coverage per item and tackle the ten with the highest first.
- Limit
- Spare parts or accessories can deliberately sit for a long time.
- 03
Forecast by gut feeling
- How you'll notice
- Reorders happen when the shelf looks empty.
- Why it happens
- Without weekly sales numbers, caution turns into over-ordering.
- What helps
- Take the last weeks' sales per item as the basis for every reorder.
- Limit
- New products have no sales history yet.
Ways to solve it
Reduce stock, without risking stockouts.
| Way | Enough if | Limit |
|---|---|---|
| Coverage per item in a spreadsheet | You have a manageable number of items and regularly export stock and sales. | Work with every export, quickly outdated. |
| Clearance of slow movers | A few items tie up most of the overstock. | Discounts lower the margin; calculate them beforehand. |
| Inventory management with stock reporting | You need stock by location and bookings. | Shows quantities, rarely capital and margin together. |
| Peak One | You want to see overstock, days of supply, and tied-up capital together. | Valuation of stock is planned; cost prices must be maintained. |
Peak One in action
From the full warehouse back to the account.
- TriggerWhere is cash stuck?
- 01 · CapitalSignalWorking Capital shows where cash is tied up.
- 02 · ItemUnderstandingDays of Inventory shows how many days your stock lasts; Sell-Through shows how fast purchased goods sell.
- 03 · InventoryDecisionOverstock shows where too much inventory sits, and so where reorders pause.
- 04 · TaskActionClearance or order stop become tasks in Peak Board, with an owner.
The apps for it
In Peak One.
Working CapitalAvailableCashWhere is cash stuck?
OverstockAvailableCapitalWhere do we have too much stock?
Days of InventoryAvailablePerformanceHow many days does the stock last?
Sell-ThroughAvailablePerformanceHow fast does purchased stock sell through?
Inventory ValuationPlannedAssetsWhat is our inventory worth?
Three steps
Free up capital. Without a stockout.
- 01 / 03
Calculate coverage
Divide inventory value by monthly cost of goods, as in the calculator above.
- 02 / 03
Find the outliers
List the ten items with the highest coverage and the highest stock value.
- 03 / 03
Pause reordering
Stop reordering these items until the days of supply fall below your target.
Frequently asked questions
Briefly answered.
How many months of stock are normal?
That depends on lead time, season, and minimum quantities. Coverage well above lead time plus a safety buffer is usually capital that's missing elsewhere.
Why landed cost and not sales price?
Tied-up money is what you've paid, not what you hope to earn. At sale prices, stock looks more valuable and days of supply look wrong.
And what if the problem is more about missing stock?
Then the reorder point is the better question. There is a separate page on sold-out items for that.
Keep exploring
What's included.
- FunctionCash flow & runwayA clear cash picture from rough numbers, with runway and cost blocks.View
- FunctionMargin & contribution marginContribution margin per product and variant, with scenarios and inventory.View
- Software categoryCash flow softwareSee what comes in, what goes out and how long it lasts.View
- Use caseTrack key figuresKeep cash, profit, and margin in view, with the source of every number.View
- ProblemNo overview of liquidityYou're not sure how long the money in your account will last.View
- ProblemConstantly sold outTop-selling products keep selling out, and revenue is lost.View
✦ A Peak principle
Cash is time. Whoever sees them decides more calmly.
Overview first, then action
More problems
Typical bottlenecks in growing companies, each with a tool you can try right away, the causes, and the path Peak One provides for it.
Solve it once. The rest follows.
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