Slow and obsolete stock: return, resell, rework or recover?

Every business has a corner of the warehouse that nobody walks past on purpose. Stock that hasn't moved in a year, sitting at full cost on the balance sheet, defended by someone who is sure a customer will want it eventually.

Holding it has a cost even if nobody sees it. It ties up cash and warehouse space, and the accounting catches up in the end. Under FRS 102, as ICAEW's factsheet explains, inventory has to be tested for impairment at each reporting date and written down to selling price less costs to complete and sell where that is lower than carrying value. Delay usually means a bigger write-down later, at a time you didn't choose.

Industry data suggests UK manufacturers are carrying more than they'd like. The CBI's August 2026 Industrial Trends Survey put the balance on stocks of finished goods at +15%, above its long-run average of +12%, while total order books sat well below normal.

Separate slow from dead first

Not everything that is slow is obsolete. Before choosing a route, sort the stock into three groups.

Slow but saleable: it moves, just too slowly for the quantity held. Stop reordering, adjust the parameters and let demand work through it.

At risk: it moves rarely, is near the end of its life, or is tied to a customer or product that is winding down. This needs a plan within the quarter.

Dead: no realistic demand at any sensible price through normal channels. This is where the four routes apply.

Use evidence, not opinion. Months of cover at current run rate, last movement date, open customer orders and product lifecycle status will settle most arguments. The rest go to one person with authority to decide.

Return

The cheapest route, when it's available. Suppliers will sometimes take stock back for credit, especially unopened current-specification product they can sell elsewhere. Expect a restocking charge and expect to be asked for something in return, such as a new order.

Check your contracts first. Return rights are often negotiable at the start of a relationship and rarely afterwards, which makes this a procurement point as much as an inventory one. Future contracts for high-value or short-life lines should include them.

Resell

Selling at a discount through other channels: trade buyers, clearance specialists, B2B marketplaces, export markets where the specification still suits, or your own outlet. The question is price against channel risk. Stock that reappears at a deep discount in front of your core customers can do more damage to pricing than the cash is worth. Control where it goes, in writing.

Count the proceeds honestly. A sale at 20p in the pound is still 20p of cash that wasn't there before, and it ends the holding cost.

Rework

Relabel, repack, kit with other products, convert to a current specification or break down for components. Rework makes sense when the cost of the work plus the margin you need is below what the reworked item will sell for. It fails when it becomes a way to postpone the decision. Put a cost cap and a deadline on it.

Recover

When nothing above works, recover what value you can and do it responsibly. Two developments matter.

Donation is now cheaper. From 1 April 2026, an HMRC measure published in November 2025 removes the need to account for VAT on eligible goods donated to charities for onward distribution to people in need or for use in their services. Per-item value limits apply. On the direct tax side, HMRC's Business Income Manual confirms that trading stock given to a charity is not brought in as a trading receipt, so the business keeps relief for its cost.

Destruction is getting harder, at least in Europe. The European Commission adopted rules in February 2026 that ban large companies from destroying unsold clothing and footwear from 19 July 2026, with medium-sized companies expected to follow in 2030 and a standard disclosure format due from February 2027. The Commission estimates that 4 to 9% of unsold textiles in Europe are destroyed before they are worn. UK businesses selling into the EU need to check whether they are caught, and the direction of travel elsewhere is clear.

Beyond donation, there is material recovery: recycling, component harvesting and selling to processors who want the material, not the product. Returns are small, but they beat paying for disposal.

Whatever the route, run the review quarterly rather than waiting for a crisis. Set a rule, for example any line over twelve months of cover or with no movement for six months goes to review automatically. Agree who decides and how fast. The businesses that recover most are the ones that act while stock still has a market.

Second Tide handles excess stock recovery, refurbishment and material recovery for the group, and BankStreet Partners can fold that cash into an inventory release programme paid from verified results.