What should businesses focus on to improve cash flow from inventory management?

Focusing on selling old inventory is a strategic approach to improve cash flow from inventory management. When businesses have inventory that is older or not moving, it represents capital that is tied up and not generating revenue. By prioritizing the sale of this old inventory, businesses can free up cash that can be reinvested in more profitable areas or used to cover operational expenses.

Additionally, selling off older inventory can help minimize holding costs, such as storage and insurance, and can also reduce the risk of obsolescence. By actively promoting these items, perhaps through discounts or targeted marketing, businesses can accelerate turnover rates and ultimately enhance their liquidity.

The other choices may not directly address the immediate need to improve cash flow through inventory management. Investing in new technologies might enhance efficiency over time but does not immediately impact cash flow. Reducing prices significantly might lead to a loss in profit margins, and increasing inventory levels can lead to more cash being tied up rather than released. Therefore, concentrating efforts on selling old inventory presents a clear path to releasing cash and improving overall financial health.