A bank balance is not a buying plan. Some of that money may already be committed to an order that has not arrived, while a shelf full of stock may leave little reason to add more. Open-to-buy planning provides a way to connect future purchases with the inventory you intend to sell and retain.
Shopify’s open-to-buy guide distinguishes retail-value, cost-value and unit-based plans. The worked example below uses merchandise cost throughout. It is a simplified planning model for a defined period, with no transfers, write-offs or other inventory adjustments assumed.
At a glance
- Keep every inventory figure on the same valuation basis.
- Deduct relevant orders already committed before planning new buying.
- Check cash availability separately from merchandise capacity.
In this guide
- Choose a period and a boundary
- Work through a hypothetical month
- Put the cash timetable beside the stock timetable
- Update the inputs when the situation changes
- Keep separate decisions separate
Choose a period and a boundary
Start with one month and one manageable category or collection. Record the stock available at the beginning, the merchandise cost of the units you expect to sell, and the stock you want at the end. All three values must use the same cost basis. Do not mix anticipated selling revenue into a calculation otherwise valued at purchase cost.
Then identify orders already placed that are expected to arrive within that same period. Their value is part of the inventory you have committed to receive. A later delivery belongs in the period in which it is expected to become available, while its payment date may belong elsewhere in the cash plan.
Work through a hypothetical month
| Planning input at cost | Illustrative amount |
|---|---|
| Desired ending inventory | €3,000 |
| Cost of units forecast to sell | €1,500 |
| Opening inventory | €2,800 |
| Committed receipts due this month | €700 |
The new merchandise capacity is €3,000 plus €1,500, less €2,800, less €700, which equals €1,000. You can check the result by rebuilding the flow: €2,800 opening stock plus €700 committed receipts plus €1,000 new receipts, less €1,500 sold at cost, leaves €3,000.
These figures are hypothetical and are not a recommendation to spend €1,000. They show the additional receipts that would fit this particular inventory plan. Whether the shop can fund them is a separate question.
Put the cash timetable beside the stock timetable
List the actual due dates for the existing order and any proposed new order. Add the other payments the business must make over that period. A merchandise plan may allow more stock while the payment calendar shows that the money is needed sooner than the shop can provide it.
Do not assume forecast sales will arrive exactly when required. Test a slower-sales case and check which commitments remain payable. If the proposed purchase depends on the most optimistic outcome, reduce or delay it until the cash plan is workable under a more cautious scenario.
Update the inputs when the situation changes
If sales are below plan, do not automatically retain the original buying allowance. Recalculate the remaining period with the inventory now on hand and a revised expectation. Likewise, if an order’s arrival moves into another month, update both periods so the same goods are neither omitted nor counted twice.
A negative result is a signal to examine the plan, not an instruction that existing stock must instantly disappear. The desired ending level, expected sales or outstanding commitments may need attention. Identify the cause before deciding whether to cancel, defer or simply avoid adding new purchases, subject to the actual terms of any order.
When preparing the sales forecast, translate anticipated unit sales into their merchandise cost for this worksheet. A forecast of selling ten units at a particular customer price does not tell you their cost value until the relevant costs are applied. Preserve the unit assumptions so you can revise them without guessing.
Keep separate decisions separate
Open-to-buy capacity says how much additional inventory fits a plan. It does not identify which products deserve the allocation. A slow reference does not earn another order just because a category has room to spend. Use product-level evidence and the intended assortment structure to decide where any available commitment belongs.
Similarly, a strong-selling product may justify attention without making every possible reorder affordable. Apply the current quantity requirements and payment terms, then return to the cash timetable. The sequence keeps enthusiasm for a winner connected to the realities of the business.
Use the Toodobem collections to shortlist candidates only after the planning boundary is clear. Review the worksheet before each material purchase decision. A useful open-to-buy plan is small enough to maintain and explicit enough to show when stock capacity, existing commitments and available cash point in different directions.
