Inventory vs. Cash Flow: Why Lagos Retailers Lose ₦2.3M Monthly

Inventory vs. Cash Flow: Why Lagos Retailers Lose ₦2.3M Monthly

Walk through any major market in Lagos—from Balogun to Computer Village—and you’ll see a common story: shops overflowing with goods, yet business owners are stressed about money. This is the “inventory illusion”: appearing rich in stock while being cash-poor.

A 2024 survey by the Lagos Chamber of Commerce and Industry highlighted that 68% of retail SMEs struggle with cash flow not because of low sales, but due to poor inventory management. Money is trapped in unsold stock, leading to an estimated ₦2.3 million in monthly lost opportunities for an average medium-sized retailer.

This article exposes the critical link between your stock and your cash flow and reveals how modern software like Leaftally provides the solution.

The Vicious Cycle: How Inventory Strangles Your Cash Flow

Many Nigerian retailers operate on a reactive basis. They don’t know:

• Which products are sitting on shelves for months.

• The exact profit margin after accounting for spoilage, storage, and financing costs.

• How much cash is literally “locked up” in their warehouse.

This leads to a dangerous cycle:

1. Overstocking: Buying too much of a slow-moving product, tying up capital.

2. Stockouts: Running out of best-sellers, missing sales opportunities and disappointing customers.

3. Emergency Purchases: Buying new stock at higher prices to meet demand, crushing margins.

4. Debt: Taking high-interest loans to cover operational costs because cash is trapped in inventory.

The Leaftally Solution: The Inventory-Finance Sync

Leaftally breaks the cycle by integrating inventory management directly with accounting and cash flow tracking. Here’s how it works:

1. Real-Time Stock Level Monitoring
Every sale, return, or new delivery is logged in Leaftally. You see your current stock value in Naira, live, on your dashboard.

2. Cost of Goods Sold (COGS) Automation
When you make a sale, Leaftally automatically calculates the cost of the sold items and updates your gross profit in real-time. No more end-of-month guesswork.

3. Low-Stock & Dead-Stock Alerts
The system alerts you when popular items are running low, so you can reorder proactively. Crucially, it also flags slow-moving inventory, allowing you to run promotions to free up cash before goods expire or become obsolete.

4. Cash Flow Forecasting
This is the most powerful feature. Leaftally uses your inventory data, sales trends, and upcoming expenses to project your cash flow for the next 30, 60, and 90 days.

• Will you have enough cash to pay suppliers after your rent is due?

• Can you afford to launch a new marketing campaign next month?

Leaftally gives you the answers, transforming you from a reactive manager to a proactive leader.

The Result: Turning Inventory from a Liability into an Asset

After implementing Leaftally, Prime Foods experienced a dramatic turnaround within 90 days:

• Reduced Spoilage: A 70% reduction in losses from expired goods.

• Increased Sales: Eliminated stockouts on 15 key product lines, increasing revenue by 18%.

• Improved Cash Flow: Freed up over ₦1.8 million in cash previously tied up in excess inventory.

• Informed Purchasing: Data-driven decisions on what to buy and in what quantity.

Take Control of Your Most Valuable Assets

Your inventory and your cash are the lifeblood of your business. It’s time to manage them with intelligence, not instinct.

 Let Leaftally Do the Work For You. Start Your Free Trial.

Stop letting your inventory hide your profits. Gain the clarity you need to grow confidently.