Can you afford your next inventory purchase order?

You can afford the order on the tested assumptions when every payment fits within available cash after existing obligations and the owner’s chosen buffer. Test the supplier balance and logistics as well as the deposit, using both base receipts and a defined downside case.

Start with the current cash forecast. Identify whether the candidate PO is new or already included, then add or replace its payments once. The order’s approval record should state the size, terms, minimum cash and assumptions that must hold.

Cash capacity and commercial value are separate checks. Confirm product contribution, demand, stock cover and delivery assumptions before committing the money.

Use a bank-reconciled forecast and the current written quote. Record the PO identifier, quantity, unit cost, deposit, balance, logistics and payment currency. Check which costs fall outside the supplier invoice.

Operations should confirm the current stock position, expected sales through the replenishment date and the supplier’s delivery terms. The bookkeeper should identify unpaid invoices and deposits already recorded so that the same commitment is not added twice.

For quantity Q, unit cost u and deposit fraction d, supplier cost = Q × u; deposit = Q × u × d; remaining balance = Q × u × (1 − d). Add separately quoted freight, duties and other payable costs on their own dates.

Use the terms that determine when cash leaves: order acceptance, production milestone, dispatch or another agreed event. If the date depends on delivery, record that dependency and update the receipt assumptions when it changes.

Confirm which deposit is still unpaid. Keep completed payments in the opening position and schedule only the remaining cash commitment. Supplier payments and COGS follow different dates: the cash schedule uses payment terms; the profitability report uses the cost of stock sold.

If the PO is absent from the baseline, add its remaining dated payments and the supported changes in receipts or other costs. If it is already included, remove its identified baseline payments and insert the revised schedule.

At each date: scenario cash = baseline cash + cumulative removed PO payments − cumulative replacement PO payments + supported changes in receipts and other cash movements. Match the payments by identifier and check the complete horizon.

An unchanged order paid on different dates should retain the same total supplier commitment. A quantity change should reconcile to the revised quote and any altered logistics or demand assumptions.

The baseline already contains a $70,000 PO: a $15,000 deposit in week 4 and a $55,000 balance in week 6. Week 6’s $67,000 inventory payment includes $12,000 for other stock. The base minimum is $31,500 against a $40,000 cash floor.

Moving the same $55,000 balance to week 8 leaves week 6 inventory payments at $12,000 and raises that week’s closing cash to $86,500. Week 8 inventory payments become $63,000. The revised minimum is $70,500 in week 8.

The total inventory payments remain $242,000 and final cash remains $91,000. The change moves the low point; it does not create cash over the complete horizon. This timing comparison assumes the supplier accepts the revised date and delivery, stock availability and receipts remain unchanged.

Choose three quantities the supplier can actually fulfil: qS, qB and qL. Apply the same quoted unit cost u, deposit fraction d and payment dates first. This isolates the effect of quantity before comparing changed terms.

For each size, remove any existing PO schedule and insert its deposit, balance and logistics. Record minimum cash, its date, stock cover and expected receipts under the same downside assumption. The numeric example above compares timing only; this worksheet supplies the quantity calculations.

Requote each size where minimum orders, unit prices or freight change. Add receipt changes only when supported by stock availability and demand evidence. A larger quantity does not automatically produce earlier collections.

Cash headroom = available cash − chosen buffer. For one additional payment with no other changes, the upper bound is the smallest baseline headroom from its payment date onward. A negative minimum means the baseline itself already falls below the floor.

A deposit and balance need a staged test. Recalculate every checkpoint after each payment, using cumulative commitments. Headroom before the deposit cannot be spent again when testing the balance.

Check daily dates near the minimum, and exclude restricted or uncommitted funds from available cash. The approval amount should fit both the tested payment schedule and the documented conditions.

A smaller order can reduce cash committed but shorten stock cover. A later balance can preserve cash until payment while depending on supplier consent. Split deliveries can change freight and availability. Record these consequences beside each cash result.

For a financing option, include the confirmed amount, date, costs and repayments. Compare the revised minimum after those movements. Keep an unavailable facility or an unagreed supplier extension out of the approval case.

Select the option that meets the cash floor with an acceptable stock and contribution outcome. Where an assumption remains open, define the evidence required before payment.

Save the quote and forecast version alongside the selected quantity, total commitment, dates, lowest cash balance and downside result. List the unresolved conditions, their owners and the date they must be confirmed.

The owner authorizes the commitment. Purchasing confirms terms and delivery; the bookkeeper checks existing liabilities and paid deposits; the preparer verifies the scenario calculation. An amended quote or delivery plan should trigger another test.

Identify the next PO awaiting payment and complete its schedule through the final balance and logistics. Compare it with the latest forecast, then write a decision: proceed on specified terms, reduce the order, renegotiate or defer pending evidence.

Use the cash-forecast guide if the baseline is missing. For a planning discussion, bring the quote, current commitments and the scenario with the tightest cash date.