Although retailers should be using an Open-To-Buy to control their buying so they have the right amount of inventory, mistakes happen and they sometimes find themselves with excess inventory. One option is to put it on sale and get whatever you can for it. This is the best choice if you are in need of cash. If you store is profitable, a better method may be to donate it to charity and take the tax deduction.
It’s wise to clear out slow-moving inventory, not only to make room for new merchandise but also to keep your store looking fresh and exciting and to offer loyal customers something new.
To help with the process of donating merchandise, there is an organization that acts as a clearing house for charities that need merchandise and retailers who need to make a donation of merchandise.
The National Association for the Exchange of Industrial Resources (NAEIR), a non-profit organization based in Galesburg, Illinois, exists to make the process easy by connecting businesses that have excess inventory with those in need.
Tax law governing business donations is better than you may realize. According to NAEIR, by donating new product overstocks and returns, regular (C) corporations may deduct the cost of the goods plus half the difference between cost and fair market value; your deduction could be up to twice cost. S corporations, partnerships and sole proprietorships earn a straight cost deduction.
NAEIR has streamlined the process for donating businesses, sending the donor shipping labels and tax documentation. Although the donor company is responsible for the shipping cost, that is also a tax-deductible expenses.
“Donating is clearly better than throwing product away and taking a loss, and it can even be preferable to liquidating,” said Emily Collins of NAEIR. “You also get the benefit of knowing that your donation is helping the needy.”
Over 7,000 companies have donated $2 billion in inventory to NAEIR since its founding in 1977. For a free donor information kit, contact NAEIR’s Corporate Relations Department at 800.562.0955 or email firstname.lastname@example.org.
If you would like to improve your inventory control to have less inventory to donate, you may wish to use an Open-To-Buy. Open-To-Buy is about helping you have enough inventory to meet your sales plan - but not too much.