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Don't Let the FISH Bite You!

FISH, a.k.a. First In, Still Here, is steadily becoming a more commonly used moniker to describe the status of surplus and obsolete inventory.

As part of a comprehensive inventory monitoring strategy, it is prudent for lenders and operators of inventory-driven businesses to ensure that along with monitoring cost valuation, inventory period is monitored with a reasonable reflection of days to obsolescence.  Measuring how long inventory sticks around, as well as how long is too long, and how much is obsolete will help ensure that the value of the inventory is presented accurately and credit lines are adjusted accordingly.

Inventory depreciates, particularly as trends and tastes evolve in a changing landscape.  If inventory has sat on the shelves for months, or even years, the original price paid for the goods may no longer reflect an accurate value, especially with discontinued product lines.  When the inventory lingers for too long and monetization becomes necessary, recovery rates will invariably be compromised.

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