If your business sells physical products, inventory is one of your biggest assets and one of your biggest financial risks. Too much of it ties up cash. Too little of it costs you sales. And when it’s tracked poorly, it quietly drains your profitability without you even realizing it.

If you sell a physical product, you already know that keeping track of what you have on hand is important. But here is something many small business owners do not realize until it becomes a costly problem: your inventory is not just a warehouse concern. It is a financial one. The way you manage your inventory has a direct and significant impact on the accuracy of your books, the reliability of your financial reports, and ultimately, the quality of the decisions you make about your business.