As the year winds down, now’s the perfect time to take a closer look at your inventory. Why? Because small adjustments today can yield meaningful financial benefits – especially when it comes to taxes, cash flow, and reclaiming space on your shelves.
Here’s a quick checklist of easy inventory improvements you can tackle before December 31st:
- Review Your Ending Inventory Value
The lower your inventory-on-hand (IOH) at year-end, the lower your taxable income – especially if you’re on an accrual basis. Start by identifying slow movers, overstocked items, or anything collecting dust. Moving excess stock now helps reduce your tax burden later.
- Flag Expiring or Obsolete Items
Pull reports or do a quick sweep for products approaching expiration. If they’re not going to be used, they can be written off. That’s a tax deduction and a way to declutter shelves.
- Spot Redundancies in Your Formulary
Do you really need five versions of the same antibiotic? Tightening your formulary improves predictability, speeds up training, and reduces the chance of ordering more than you need. Consolidate where you can.
- Take Advantage of 471(c) if You’re Eligible
Some clinics qualify to use simplified inventory methods under IRS Section 471(c), especially if they’re a cash-basis taxpayer with revenue under $25M. Talk to your accountant about whether this could benefit you.
- Look at Your COGS Trends
Cost of goods sold (COGS) is the second-largest expense at your hospital. If it’s trending too high, it’s often a symptom of overordering, poor pricing controls, or inefficient stock use. Fixing this before year-end sets you up for a stronger Q1.
- Centralize and Automate
Still relying on whiteboards, pull tags, or mental math? This is the time to centralize inventory into one system and lean on tools like Inventory Ally to automate reorder points, flag issues early, and save you serious time.
Inventory doesn’t have to be complicated – and cleaning it up before year-end can deliver real results. You’ll not only free up cash and shelf space, but you’ll walk into 2026 with more clarity, less waste, and tighter margins.
Special thanks to our friends at VetBooks for lending their accounting expertise in shaping this list.
