Dead Stock Cost Calculator
Calculate the true cost of holding dead or obsolete inventory, including hidden holding and opportunity costs.
Item Details
Enter details about the dead/obsolete stock.
Holding Costs
About Dead Stock Costs
Dead stock costs extend far beyond the obvious write-down. Every month you hold unsold inventory, you incur warehouse costs, insurance premiums, and opportunity cost on the capital tied up. Under Australian accounting standards (AASB 102), inventory must be carried at the lower of cost or net realisable value - meaning you may need to write down stock as soon as its market value falls below cost. From a cash flow perspective, dead stock represents capital that could be redeployed into faster-moving products. The general rule: if stock has not moved in 12+ months and has no realistic prospect of sale at above liquidation value, it is usually better to clear it and free up the capital and warehouse space.
For reference only. Consult your accountant for stock write-off decisions. Learn about AP Automation
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The real cost of dead stock for Australian wholesalers and distributors
Dead stock - inventory that has not sold within a reasonable period and shows no realistic prospect of selling at normal margins - is one of the most significant drains on working capital for product-based businesses. The visible cost is the write-down from original purchase price to current realisable value. But the true cost includes warehouse rent, insurance, handling, and the opportunity cost of capital that could be deployed in faster-moving inventory or other investments.
Under Australian Accounting Standards (AASB 102 - Inventories), stock must be carried at the lower of cost and net realisable value. This means once the market value of inventory falls below its cost, the business is required to write it down in its financial statements. For tax purposes, the ATO allows businesses to value trading stock using cost, market selling value, or replacement value - whichever is lowest - at the end of each income year.
The general principle: if stock has been sitting for 12+ months with no sales, and the ongoing holding costs exceed the expected recovery from an eventual sale, it is almost always better to liquidate - even at a steep discount - and redeploy the capital and warehouse space. This calculator helps quantify that decision by comparing the cost of continuing to hold against various liquidation scenarios.
How does AP automation connect to inventory management?
Accurate inventory valuation depends on purchase invoices being processed correctly and on time. When supplier invoices are delayed or miscoded, your stock-on-hand figures and cost-of-goods-sold calculations become unreliable - making it harder to identify dead stock early. Automating accounts payable ensures every purchase invoice is captured, coded to the right inventory account, and posted promptly.
See how Pulsify automates AP →Keep your inventory costs accurate with automated AP
Pulsify automates AP from inbox to ledger - invoice capture, coding, approval workflows, and sync to Xero or MYOB.