Follow the whole cycle: stock is purchased, sales may become receivables, customers pay later, and supplier bills and operating costs come due in the meantime.
Revenue, cash flow and profit answer different questions
Revenue records sales earned. Profit considers the costs associated with earning that revenue. Cash flow records money entering and leaving the business. A profitable sale made on credit can leave cash unavailable for several weeks.
A distributor invoices ₦5,000,000 and collects ₦2,000,000 before month-end. Goods sold cost ₦3,700,000 and operating expenses are ₦600,000, giving ₦700,000 before interest and tax. But ₦3,000,000 of that month's invoices remains uncollected. If supplier payments of ₦3,000,000 and ₦600,000 of expenses are paid during the month, those cash movements alone produce a ₦1,600,000 shortfall.
The example excludes opening cash and other movements. It shows why the bank balance cannot be inferred from the sales report. Review an income statement and a cash forecast together.
Credit sales grow faster than collections
Customer credit can support established trading relationships, but informal terms make collection uncertain. Record the amount, due date, agreed terms and responsible contact for every credit invoice. Resolve delivery or pricing disputes promptly instead of allowing them to become unexplained overdue balances.
Group receivables by how long they are overdue. Assign an action and next contact date to each significant balance. Review new orders alongside the customer's existing exposure, using agreed credit limits and approval rules rather than relying on memory.
Separate promises to pay from cleared receipts. Match partial payments accurately, and record approved credit notes so both the customer and the business are working from the same balance.
Too much stock consumes working capital
Inventory supports sales, but stock that sits for months keeps money unavailable for other needs. Look at how long each product has been held, its sales pattern and its margin. A fast seller and a slow specialist line should not follow identical purchasing rules.
Inventory turnover is commonly calculated as cost of goods sold divided by average inventory at cost for the same period. Use it alongside product-level detail: a healthy overall figure can conceal a group of slow-moving products. Seasonality and availability requirements also matter.
Before ordering, check stock on hand, open orders and credible demand. Review quantities already committed to customers separately from stock genuinely available for sale. Avoid purchasing simply to reproduce last month's order.
Warehouses and transfers can hide available stock
One warehouse may reorder while another holds excess units. A transfer recorded only at dispatch can leave the receiving location looking short and the stock difficult to trace.
Record the sending location, receiving location, product, quantity, dispatch date and receipt confirmation. Investigate transfers that remain open longer than expected. Agree how damaged or short deliveries are recorded so differences are visible rather than silently absorbed.
Supplier due dates and logistics create a timing squeeze
A supplier may require payment before your customers settle their invoices. Put supplier balances and due dates on the same calendar as expected customer receipts. Discuss payment terms before committing to a purchase, and do not assume an extension will be available.
Transportation, loading, delivery attempts and fuel can reduce the value of an otherwise attractive order. Record these costs consistently and review whether small or distant deliveries still contribute enough after servicing costs. Include relevant inbound costs in inventory valuation according to your accounting policy; avoid deducting the same cost again elsewhere.
Changing purchase prices and customer price groups affect margins
Different retail, wholesale and volume prices can make sense commercially. Problems begin when a discount is applied to an outdated cost, the wrong customer group is selected or an exception has no approval record.
Review price groups when supplier costs change. Compare the realised selling price after discounts with the relevant cost of goods sold, and review delivery economics separately. Strong sales to one customer may bring weak margins and slow collections at the same time.
Create a rolling weekly cash view
Start with available cash and bank balances. List expected receipts by realistic collection date, then supplier payments, payroll, logistics and other operating costs by due date. Calculate the closing balance and carry it into the next week. Update the forecast as facts change.
- Review overdue receivables and disputed invoices.
- Check stock turnover and the oldest unsold products.
- Reassess planned purchases against stock and cash needs.
- Reconcile warehouse transfers and supplier balances.
- Review customer pricing, gross margins and delivery costs.
- Compare forecast receipts with actual cash received.
Maintain a more cautious scenario for delayed collections. Its purpose is to reveal a gap early enough to discuss orders, collections or payment arrangements, rather than discovering the gap on a supplier's due date.
When should you consider business software?
If receivables, warehouses and purchases live in separate files, preparing a reliable weekly view becomes slow. Look for a system that connects these records and lets authorised staff trace a balance back to its transactions.
The TrakPoints distributor inventory solution connects sales, warehouses, stock transfers, purchases, suppliers, customers, price groups, receivables, payables, expenses and accounting. Its reports can support a review of stock and balances; collection decisions and cash forecasts still require management judgement.
Test an invoice, partial collection, transfer and supplier payment in the relevant plan. Then explore TrakPoints solutions for the wider business processes you want to connect.
Sources and examples
Product scope checked against the linked TrakPoints industry page on 19 September 2026. For the distinction between cash movement and profit, see BDC’s cash-flow guide. All Naira scenarios in this article are illustrative, not customer results or market statistics.