How a Store Can Operate During Falling Demand and Rising Costs

When demand falls and costs rise, a store owner needs to compare available cash with payments due on specific dates every week. Start with the cash on hand and account balances, prepare a four-week plan of incoming and outgoing payments, and list supplier settlements, wages, taxes, and owner withdrawals separately. Approve new purchases with demand, stock levels, and the timing of customer payments in mind.

At the same time, review expenses, discuss a manageable payment schedule with suppliers in advance, and set procedures for operating during power outages. Each week, replace planned amounts with actual figures and review decisions if incoming payments will not cover near-term obligations.

Determine How Much Money the Store Can Use

The owner, together with the accountant or the employee responsible for financial records, should distinguish among three figures. Sales show the value of goods purchased by customers. Receipts show how much money the store has actually received. Profit also depends on the cost of goods sold and other expenses for the relevant period.

For example, a sale with deferred payment does not yet provide money to settle with a supplier. Paying for a previously received shipment reduces today’s cash balance, even though some of the goods may still be in stock. Therefore, the account balance alone does not show profit or determine how much the owner can take for personal needs.

Gather the following information for the first calculation:

• Available funds. Count cash and account balances that can be used. Do not count a transfer between the store’s own accounts as a new cash inflow.
• Expected receipts. Record the expected amount, receipt date, and reason: ordinary retail sales, payment for a specific order, or a customer’s repayment of a debt.
• Upcoming payments. Record the payee, amount, due date, responsible employee, and document authorizing the payment.
• Customer refunds. Schedule these as a separate line so they are not lost among other payments.
• Owner withdrawals. Record the amount and date separately from the store’s operating expenses.

The accountant should enter the exact amounts and due dates for wage and tax payments specific to your business. The owner adds rent, payments for supplies, delivery costs, equipment maintenance, and other approved expenses. The result is one payment list in which every amount has a date and a person responsible for it.

Prepare a Weekly Cash Flow Plan

Keep the plan in a spreadsheet: each column represents one week, and each row represents a type of receipt or payment. The balance formula is simple: starting funds + receipts − payments = ending funds. The ending balance for one week becomes the starting balance for the next.

Illustrative example. The store has UAH 40,000 at the start of the planning period. All amounts in the table are fictional and are included to explain the calculation. Receipts are money the store expects to actually receive during the relevant week; supplier payments cover payments for deliveries that have already been approved.

Over four weeks, the store will receive UAH 240,000 and pay out UAH 249,000. The ending balance will be 40,000 + 240,000 − 249,000 = UAH 31,000. This shows how cash changes over the selected period; profit requires a separate calculation of income and expenses.

Every Monday, the responsible employee reconciles the completed week against the cash register and bank statements, explains variances, and adds a new fourth week to the plan. If a large payment falls at the start of the week while most receipts are expected at the end, break that period down by day. A positive balance on Sunday is not enough to pay an invoice due Monday.

Calculate a Lower-Sales Scenario

Continuation of the illustrative example. Suppose receipts are 20% below plan: UAH 48,000, 44,000, 52,000, and 48,000. This is an assumption for the calculation, not a forecast or a universal decline rate. Leave approved payments unchanged at first.

• Week 1: 40,000 + 48,000 − 53,000 = UAH 35,000.
• Week 2: 35,000 + 44,000 − 73,000 = UAH 6,000.
• Week 3: 6,000 + 52,000 − 50,000 = UAH 8,000.
• Week 4: 8,000 + 48,000 − 73,000 = −UAH 17,000.

A negative result means the store will be short by UAH 17,000 for the planned payments. The balance is already small before week two, so the owner should review optional orders and withdrawals and start negotiating delivery and payment dates. Cancelling the UAH 5,000 withdrawal reduces the shortfall to UAH 12,000, but does not eliminate it.

Set a minimum operating balance for the store: an amount to cover payments due before the next sufficiently predictable receipts, plus costs associated with specific disruptions. Account for uneven sales, payment settlement times, refunds, and dependence on equipment. If the plan falls below this threshold, a new optional order requires a separate decision by the owner.

Choose Purchases Based on Demand and Contribution Toward Costs

Before placing an order, the purchasing employee should compare stock levels, actual sales and returns over comparable periods, the delivery lead time, and the payment date for the supplier. Determine how many units can realistically sell before the next restock. Treat seasonal demand, a one-time large order, and days when the item was unavailable separately, since they can distort the average.

To compare goods, calculate the contribution toward costs—the amount left from the sale price after the purchase cost and expenses directly related to that sale. The store still needs to use this amount to cover rent, labor, and other expenses.

Illustrative example. The item’s selling price is UAH 500, its purchase cost is UAH 320, the payment processing fee is UAH 15, and packaging costs UAH 10. The contribution per unit is 500 − 320 − 15 − 10 = UAH 155. If ten units are sold with no returns, the contribution is UAH 1,550 toward the remaining expenses. Purchasing those ten units requires UAH 3,200, and the time needed to recover that outlay depends on actual sales and receipt of payments.

The purchasing employee prepares a proposal, and the owner approves it after answering four questions:

1. Do recent sales confirm the need for this quantity?
2. Does the actual price after discounts leave a sufficient contribution toward costs?
3. When must the delivery be paid for, and when is the money from its sale expected?
4. Will enough money remain after payment to cover near-term obligations?

For goods with unstable demand, discuss a smaller batch or more frequent deliveries. For stock that has not sold, first identify the reason: an unsuitable size range, price, product condition, seasonality, or poor visibility in the store. Before offering a discount, recalculate the contribution at the new price and set a period for assessing the result. Selling more units by itself does not show that the decision improved the financial result.

Check Stock and Customer Purchases in Torgsoft Before Ordering

In Torgsoft, open «Склад → Стан складу» (“Warehouse → Stock status”): here you can review quantity, cost, and selling price. An accounting center is a store or warehouse in Torgsoft. To compare sales locations, enable «Усі склади» (“All warehouses”) and select the required accounting centers. The purchasing employee can set a minimum stock level and use the «Закінчується товар» (“Stock running low”) filter for an initial selection of items. Before ordering, review the movement and sales of the selected item: reaching the minimum stock level still requires an assessment of current demand.

To understand how an individual customer’s purchases have changed, open their card through «Маркетинг → Клієнти» (“Marketing → Customers”). Purchases and returns associated with that customer accumulate on the «Придбання» (“Purchases”) tab. Compare those purchases and returns over periods of equal length and check them against the relevant sales and return documents: a lower purchase amount may coincide with more returns or a change in order composition. This analysis covers transactions assigned to the selected customer. To plan payments, the responsible employee separately enters expected receipt and payment dates in the cash flow spreadsheet.

Review Expenses in Light of Their Effect on Operations

Divide expenses into fixed, variable, and mixed. Within the near-term period, fixed expenses change little with sales volume, such as an agreed rent payment. Variable expenses arise in connection with sales, such as packaging or a transaction fee. Mixed expenses may include a subscription fee and a usage charge. For each expense, determine when the store can actually reduce the payment and what will change as a result.

Assign a responsible person, deadline, and performance measure to each change. Do not include expected savings in the cash plan until you know the date on which they will reduce payments. Ending a service next month will not help pay an invoice due this week.

Agree on Terms With Suppliers Before a Payment Is Due

As soon as the plan shows a cash shortfall, the owner or authorized purchasing employee should contact the supplier. Prepare a list of invoices, amounts and payment dates, order fulfillment status, and a specific proposal. This could involve splitting an upcoming delivery into parts, ordering a smaller batch, or arranging a different payment schedule by mutual agreement.

Propose dates and amounts the store can meet even if receipts are lower than expected. Record agreed changes in the relevant documents, and only then update the payment calendar. If the supplier does not agree, keep the original date in the plan and review other decisions. Expecting a positive response does not eliminate a future cash shortfall.

Prepare Procedures for Operating During Power Outages

The store manager should identify which operations depend on electricity and connectivity: product storage, lighting, payment acceptance, operation of the accounting system, order assembly, and order handover. For each operation, record the person responsible, the equipment required, and the condition under which work must stop.

• Ask a qualified specialist to assess the load, compatibility, and safe connection of backup power equipment.
• Check whether the necessary devices and connectivity work in the planned setup and how long the power supply actually lasts.
• Arrange a backup of accounting data and a test restoration with the person responsible for technical support.
• For goods with special storage requirements, assign an employee to monitor those conditions and report deviations.
• Prepare a procedure for notifying customers of changes to pickup times or store hours.

Include maintenance of backup equipment, connectivity, and consumables in the cash plan. After a practice run, record which operations the store managed to perform, which remained unavailable, and what needs to be fixed. This gives employees a specific procedure to follow during an outage.

Four-Week Action Plan and Conditions for Further Decisions

At the weekly meeting, record the nearest date on which a cash shortfall may occur, the action to address it, the person responsible, and the deadline. The following week, assess the actual result and recalculate balances. This makes it clear how each purchase, expense change, or supplier agreement affects the store’s ability to make its payments.