Why Inventory Age Matters in Lending Decisions
Series: Unlocking Real-Time Risk Visibility in Consumer Products (Part 1 of 3)
When lenders look at a borrower’s financials, the inventory line item can appear deceptively solid. A warehouse full of product may look like healthy collateral on paper, but not all inventory carries the same value. The age of that inventory often determines whether it’s truly liquid or at risk of becoming obsolete.
At CoMetrics, we’ve developed a simple but powerful way to measure inventory age at the SKU level — giving lenders, investors, and consumer product executives visibility they typically don’t get from traditional reports. And through our proprietary DataMetrics technology, these insights aren’t one-off snapshots. They’re delivered on a regular cadence— daily for operators, monthly or quarterly for lenders — so stakeholders always have current information, without disruption.
How We Calculate Inventory Age
For every SKU in a borrower’s warehouse, we trace back to the last received date in the purchase journal. For example:
- SKU XYZ was last received on March 15, 2025.
- Our most recent inventory snapshot is August 31, 2025.
- The age of that SKU’s inventory is the number of days between those two dates.
We then bucket the total units on hand and inventory value into three key categories:
- Less than 1 year old – typically considered eligible collateral.
- 10–12 months old – items approaching aged status; a useful “watch list.”
- Greater than 1 year old – often obsolete, with limited resale or liquidation value.
This method provides a precise, data-driven view of what portion of inventory is actually viable.
Why Age Buckets Matter to Lenders
- Greater than 1 year: usually obsolete, low liquidation value, often excluded from collateral eligibility.
- 10–12 months: a leading indicator. These goods may still be eligible, but lenders know they’ll soon age out.
- Less than 1 year: generally viable, though category-specific cycles (e.g., seasonal products) still matter.
Why Age Buckets Matter to Consumer Products Companies
The best-run consumer brands treat aged and near-aged inventory as a warning sign. They know that:
- A rising “over one year” bucket signals forecasting or operational challenges
- A declining bucket reflects strong liquidation discipline.
- Managing age effectively protects working capital, reduces write-offs, and improves lender confidence.
With DataMetrics monitoring, these signals aren’t reviewed once a year — they’re available continuously, so operators and lenders alike can respond before problems compound.
Beyond “Aged” — Potentially Distressed Inventory
Age is only one part of the story. In the next article, we’ll introduce Potentially Distressed Inventory, a broader framework that incorporates not just age, but margin performance and supply duration, to give a more complete picture of risk.
Final Word
Inventory balances alone don’t tell the full story. By understanding how old inventory is — and seeing those numbers updated on a consistent, unobtrusive cadence — lenders, investors, and operators can make more proactive, informed decisions.