Lara GuevaraSupply Chain expert (Product and Service)

Cash In Warehouse Is Not Cash In Bank

2 Mar 2026 · 1 min

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0:56

In this brief advisory video, the speaker explains that inventory held in a warehouse is not equivalent to cash in a bank because it is illiquid until sold. Using a typical direct-to-consumer (TTC) brand as an example, they note that most such brands turn inventory only 2–3 times per year, meaning cash is tied up for 4–6 months. The speaker highlights the hidden costs of holding inventory—storage fees and missed opportunities for advertising, hiring, or better supplier terms. They introduce a simple metric to assess liquidity: inventory turns, calculated as annual cost of goods sold (COGS) divided by the current inventory value. A turnover rate below 4 indicates cash is trapped. Viewers are urged to compute their own turnover, comment the number, and follow for a solution.

Chapters

Bank account says 20K, warehouse says 200K. Guess which one pays rent? So spoiler, it's not the warehouse. 200K in inventory is not 200K in assets. It's 200K trapped until someone buys. Let me make this simple. Most TTC brands turn their inventory 2 to 3 times a year. That means your cash is locked up for 4 to 6 months before it comes back. So that 200K, you're not getting it back until summer, maybe fall, and every month it's It's there, you're paying storage fees, you're tying up capital that could be running ads, hiring, or negotiating better terms. The brand that wins isn't the one with the most inventory, it's the one that turns inventory into cash the fastest. So do this, pull up your inventory value right now, divide your annual COGS by that number. That's your inventory turns. If it's under 4, your cash is trapped. How much of your cash is trapped? Comment your number, follow for the fix.