Dead stock: admitting what is never going to sell

Dead stock is inventory that is not going to sell at anything like the price you paid: the discontinued line, the wrong size, the thing a customer ordered and never collected. It sits in the accounts as an asset at full cost, occupies space you pay rent on, and absorbs attention every time somebody counts it. The cost of holding it is real and continuous, and the loss already happened on the day it stopped selling.

Identifying dead stock

• No movement in twelve months is a reasonable default line, shorter for anything seasonal or perishable.
• Items where the remaining quantity exceeds a realistic several years of demand, even if a few units move occasionally.
• Anything superseded by a newer version that customers now expect.
• Stock held for a customer who has stopped ordering, which is often the largest single category and the hardest to admit.
• Parts for equipment nobody runs any more, which accumulate invisibly because each one was sensible when bought.

The options, in order of value recovered

1. Sell it at a discount while it still has some appeal, which recovers more than any later option and feels worse than all of them.
2. Bundle it with something that does sell, so it leaves without a visible markdown.
3. Return it to the supplier, which is occasionally possible and almost never asked about.
4. Sell it to a clearance buyer or trade channel at a fraction of cost.
5. Use it internally, as parts, samples or demonstration stock.
6. Donate it, which may carry a tax benefit and definitely carries a disposal saving.
7. Scrap it, which is the right answer more often than anybody likes and ends the ongoing cost.

Why holding on is the expensive choice

Because the alternative to a loss already incurred is the same loss plus rent, handling, counting, insurance and the capital that is not doing anything else. Waiting for the right buyer is a rational-sounding plan that has been running for three years in most stockrooms, and the arithmetic rarely supports it: a unit that cost a hundred and might fetch twenty next year is not an asset worth a hundred, and treating it as one distorts every decision made from the balance sheet.

Separate the disposal decision from the blame question. Dead stock usually exists because somebody made a reasonable purchase that did not work out, and a process where admitting it is punished produces stockrooms full of things nobody will discuss. The purchase is finished; the only live decision is what to do with the goods now.

Preventing the next accumulation

Most dead stock traces to one of three things: a minimum order quantity that forced a two-year purchase, a special order nobody chased, or a line that was discontinued without anybody checking what remained. The defences are correspondingly dull — review slow movers quarterly rather than annually, take deposits on special orders, and make discontinuation a decision that includes the remaining stock rather than a marketing announcement.

Ettex Records suits the disposal log: what was written off, when, at what value, by whose decision and where it went. That record is what an auditor asks for, and it is also the only way to see the pattern — which supplier, which category, which buying decision keeps producing it.