Inventory is one of the largest investments made by most businesses, yet it is often overlooked. In fact, inventory can often mean the difference between success and failure. According to SCORE , using data from the Small Business Administration (SBA), nearly one-third of businesses fail within two years, and two-thirds fail within seven years. In his book “Small Business Management”, Michael Ames reveals that inexperience and poor inventory management are among the top reasons for small business failure.

Between the lack of experience and the access to appropriate technology, small businesses have not had the tools to make smart inventory management decisions. That is where ePhiphony Incorporated's patent pending solution, Phitch OC 9.0, comes in to guide small businesses to optimize their inventory at peak financial performance.

Kathy Yakal of PCMAG highlights “of the many QuickBooks add-ons that help with administrative inventory tasks, Phitch OC 9.0 is the only one that actually helps optimize inventory at maximum economic profit. Economic profit, which is a measurement of the economic value of an investment, can better weigh the complex tradeoffs involved with purchasing inventory.”

Economic Profit, also known as economic value added, is defined as the net operating income after taxes minus the cost of capital. Economic profit is the difference between the profits the enterprise derives from its operations and the capital charge incurred through the use of its credit line. Economic profit properly accounts for all the complex trade-offs involved in creating value. Economic profit is often referred to as Economic Value Added or EVA (Trademarked by Stern Stewart & Co.).

ePhiphony, certified by Intuit, has created the ultimate inventory optimization application for small business accounting software.  The platform includes powerful tools that help maximize economic profit, which has been mostly for large companies that can afford costly systems.  While large companies have been using costly systems, they have surprisingly been using an outdated model developed in 1913 based on minimizing variable costs. Not only is Phitch easier and more affordable, but it is using a much better metric to make inventory management decisions.

There are four primary components that feed into economic profit. To learn more about their impact on inventory, click on the links below:

►Net Income (Revenue minus expenses)

►Taxes

►Capital (Inventory, customer service…)

►Cost of Capital

These combine to form the Phitch logo and provide powerful tool to implement Lean.