Boost Pharmacy Cash Flow With The Hidden Cash Sitting on Your Shelves
If you’re like most independent pharmacy owners, you’ve felt the pressure of pharmacy cash flow problems. Wholesaler bills are due in days, PBM reimbursements don’t arrive for weeks, and somehow you’re left wondering why your bank balance never matches the effort you’re putting in.
The hidden truth? A big reason for those pharmacy cash flow problems is poor inventory turns. Every extra bottle sitting on your shelf is cash trapped in limbo—money you can’t use to pay staff, cover bills, or invest in growth. The good news is you can fix this.
By improving inventory turns, you can free up thousands of dollars in cash flow without filling a single extra prescription. Here’s how.
What Exactly Are Inventory Turns? How Do They Impact Pharmacy Cash Flow?
Inventory turns measure how many times you cycle through your stock each year. The formula is simple:
Annual Cost of Goods Sold ÷ Average Inventory = Inventory Turns
If your pharmacy is turning inventory eight times a year, it means your stock cycles about every 45 days. Twelve turns means every 30 days. Faster turns mean you’re freeing up more cash for operations instead of leaving it locked up on the shelves.
Target: Independent pharmacies should aim for a minimum of 24 turns, and even better is closer to 30. Most owners are closer to 12-16, which explains why pharmacy cash flow problems feel never-ending.
Why Better Inventory Turns Improve Pharmacy Cash Flow
Close your eyes and picture your pharmacy shelves full of bottles. Now, turn all those bottles into little stacks of cash. That is really what is sitting on your shelves… cash. When you have too much inventory on your shelves, it means you have less cash in your bank.
Fat Inventory = Skinny Wallet
- Immediate cash flow boost: Selling through stock faster puts money in the bank.
- Less waste: Expired meds stop quietly draining your profit.
- Smarter pharmacy inventory management: You order what you need right before you need it, not to sit on the shelf.
- Lower stress: Bills get paid on time because your cash isn’t tied up on the shelf.
Simple Steps to Improve Inventory Turns (Start This Week)
1. Return Dead Stock Immediately
Dead stock is inventory that hasn’t moved in 90 days or more. It’s not just wasted shelf space—it’s cash sitting idle that you desperately need for operations. Most wholesalers have return programs, but pharmacy owners often delay or avoid using them because it feels like admitting defeat.
Here’s the truth: every week that dead stock sits there, you’re financing your wholesaler’s profits instead of your own.
Action plan for this week:
- Run an inventory report sorted by last dispensed date.
- Flag anything not touched in the last 90 days that meets the criteria to return to the wholesaler.
- Create a “dead stock shelf” in your pharmacy—physically pull those items off regular shelves so they’re not forgotten.
- Contact your wholesaler to process returns or exchanges.
- Set a monthly reminder on your calendar to repeat this process.
Result: Free up hundreds or even thousands in cash almost immediately, while also creating cleaner, more accurate pharmacy inventory management.
2. Smaller Is Better
The most common cause of pharmacy cash flow problems is over-ordering. Owners try to “play it safe” by keeping an “extra bottle or two” in stock, but that just traps more cash in bottles. Since wholesalers deliver daily, there’s no reason to tie up that much money.
By placing smaller, more frequent orders, you lower your on-hand inventory while still meeting patient demand.
Action plan for this week:
- Use your daily cost of goods sold (COGS) as a measuring stick.
- Ensure your daily order amount is LESS than your daily COGS amount.
- This habit will slowly reduce the inventory on your shelves and boost your pharmacy cash flow.
Result: Thousands of dollars stay in your bank account instead of your wholesaler’s, giving you more breathing room to pay bills on time.
3. Sell non-returnable inventory
We all have those bottles sitting on our shelves that just piss you off every time you look at them. The ones with the label that the patient never picked up or are opened and only used for 1 prescription. Many pharmacies have 10-15% of their inventory value in these “zombie” bottles. Inventory that could be dispensed, in date, but can’t be returned to the wholesaler. Depending on your state, you may be able to sell these zombie bottles through online portals such as EzriRx RPh to RPh service.
Action plan for this week:
- Identify these zombie bottles and mark them with a bright colored sticker (I like hot pink stickers).
- See if any active prescriptions exist for these and contact patients to see if they need a refill.
- Contact prescribers of these drugs to see if they have any patients who need the medicine.
- Contact other local pharmacies and see if they can use it.
- Create an online pharmacy to pharmacy account and post for sale online.
Result: You’ll be able to lower your amount of zombie bottles and recapture hundreds of lost dollars.
4. Use Wholesaler Ordering Tools Wisely
Wholesalers love it when you let their systems auto-generate orders. It guarantees you’ll always have too much on your shelves. These tools are helpful, but only if you control them.
Use wholesaler data as a baseline, then apply your own pharmacy inventory management discipline.
Action plan for this week:
- Review your wholesaler’s suggested order before submitting it.
- Cross-check with your Top 100 list and recent dispense data.
- Cut quantities of slower movers by 25–50 percent compared to the wholesaler’s suggestion.
- Ask your wholesaler rep about extending payment terms by even a few days—it can make a huge difference for pharmacy cash flow problems.
Result: You’ll keep shelves lean without risking patient care and stop wholesaler tools from sabotaging your cash flow.
5. Assign Accountability for Inventory Management
If inventory is everyone’s job, it’s no one’s job. Cash flow depends on having someone responsible for making sure the process is followed consistently. Assign a tech or clerk to own inventory management, and track their responsibilities with a controlling calendar.
Action plan for this week:
- Choose one staff member to oversee pharmacy inventory management.
- Create a controlling calendar for them with tasks like:
- Weekly cycle counts of Top 100 drugs
- Monthly dead stock returns
- Daily review of par levels before ordering
- Review their calendar monthly to hold them accountable.
Result: Inventory turns improve because someone owns the process, and you stop losing money due to “I thought someone else was handling it.”
Need some additional help understanding controlling calendars? Check out this blog to understand how you can quickly and easily implement controlling calendars in your pharmacy and cut down on your stress levels.
Common Mistakes to Avoid
- Stocking “just in case” drugs that never move.
- Ignoring slow movers until they expire.
- Relying 100% on wholesaler tools to set orders.
- Delegating ordering without assigning clear accountability.
- Failing to review inventory metrics weekly.
Final Thoughts
Pharmacy cash flow problems aren’t always about PBMs—they’re often about cash sitting on your shelves. By improving inventory turns, you free up money that can pay bills, cover payroll, and create financial breathing room.
Start this week by returning dead stock, cutting order sizes, and assigning accountability. These steps alone can free up thousands of dollars and relieve the constant stress of managing cash.
If you want step-by-step guidance on improving your pharmacy’s cash flow (so you have more money in your bank account), then you need to check out Pharmacy Badass University. It has a simple and powerful blueprint to tackling inventory turns that’s helped turn around dozens of pharmacies into 6-figure profits!
