The Excess and Obsolete Inventory Policy Built the Way Finance and Supply Chain Teams Actually Work
Stop managing surplus stock reactively. This 12-page policy guide gives financial controllers, supply chain managers, and CFOs a complete, customisable framework for identifying, reserving, and writing off excess and obsolete inventory, aligned with global best practices and covering every inventory category from raw materials to finished goods.
Instant download · Word & PDF · 12 pages · Fully customisable · Lifetime access
Your surplus stock is sitting there.
The write-off policy isn't.
From uncontrolled stock risk to structured reserves, with a policy that actually works
Every manufacturer and distributor accumulates excess and obsolete inventory. Demand shifts, products get discontinued, forecasts miss. Without a clear policy, the resulting write-offs are inconsistent, the balance sheet gets overstated, and finance and supply chain spend months arguing over who owns the problem.
A strong E&O policy defines the rules in advance: how to classify stock as excess or obsolete, when to raise a reserve, how to calculate the provision, and who approves a write-off. It moves the conversation from blame to process.
This guide is built by a practitioner who has managed inventory portfolios across global manufacturing operations. It reflects the same frameworks used in finance-led inventory transformation projects, ready to deploy in your organisation today.
What counts as excess?
Stock held beyond your coverage threshold, defined by demand, lead time, and safety stock policy.
When do we write it off?
The policy sets clear thresholds and review cadences so write-off decisions are consistent and defensible.
How much do we reserve?
Provision calculation methods aligned with IFRS IAS 2, so finance can sign off with confidence.
How do we prevent it?
Root cause identification and continuous improvement accountability built into the policy structure.
Every element your team needs to govern excess and obsolete inventory, pre-written
Open the Word document, replace the company name, and you have a board-ready inventory policy from day one. No legal drafting required. No starting from a blank page.
Policy Purpose & Scope Statement
A formal opening section defining what this policy covers, why it exists, and which inventory categories and business units it applies to.
E&O Classification Criteria
Clear definitions for what constitutes excess versus obsolete inventory, with thresholds linked to demand coverage, age, and stock movement.
Inventory Reserve Evaluation Framework
A structured quarterly review process for calculating and recording provisions, so finance can close books accurately every quarter.
Write-Off Approval Process
Defined approval hierarchy for write-offs by value threshold, so the right people sign off, and nothing falls through without authorisation.
Coverage Across All Inventory Categories
Finished goods, raw materials, work-in-process, and inventory held at subcontractors, every category is covered within a single policy.
Root Cause & Continuous Improvement Section
A structured section for identifying why E&O is occurring, and assigning accountability to prevent recurrence.
Roles & Responsibilities Matrix
Who owns the E&O review, who calculates the reserve, and who approves disposal, mapped clearly across finance, supply chain, and management.
IFRS IAS 2 Alignment Notes
References to the relevant accounting standard ensure your policy is audit-ready and consistent with international financial reporting requirements.
Word & PDF Formats
The Word version is fully editable, add your logo, adjust thresholds, rename sections. The PDF is ready to share immediately with leadership or auditors.
A clear look at what the policy covers
A structured, readable policy document gives every stakeholder, from the warehouse to the CFO, a single source of truth for managing excess and obsolete inventory.
Designed for finance and supply chain practitioners.
Not policy drafting consultants.
Ready-to-deploy document
Replace the company name, adjust the thresholds for your business, and the policy is ready to present for approval. No blank page, no legal drafting.
Quarterly reserve evaluation
A structured process for calculating E&O provisions each quarter, so finance can close accurately and auditors have a clear paper trail.
All inventory categories
Finished goods, raw materials, WIP, and subcontractor-held stock, all covered under one consistent policy framework.
IFRS IAS 2 aligned
Built in line with the international inventory accounting standard. Your auditors will recognise the framework immediately.
Multi-site standardisation
Designed to roll out across multiple business units and manufacturing sites, consistent rules, consistent reporting, no more division-by-division variation.
Fully editable Word format
Edit every threshold, section heading, and role title to match your organisation's structure. The PDF version is available for immediate distribution.
From download to deployed policy in four steps
Download & open
Open the Word document and replace the placeholder company name and logo with your own.
Set your thresholds
Adjust the coverage days, age criteria, and provision percentages to match your business rules.
Assign ownership
Name the role holders in the responsibilities matrix, finance controller, supply chain manager, and approving executive.
Distribute & implement
Share the PDF with leadership for sign-off. Roll out to all business units. Run your first quarterly E&O review under the new framework.
Built for the people who have to
defend inventory write-offs to the board
Close the quarter with accurate, auditable E&O reserves
Stop estimating provisions. This policy gives you a repeatable calculation process auditors can follow.
Move from reactive write-offs to proactive stock control
A structured review cadence means you catch excess inventory before it becomes a write-off conversation.
Align all divisions under one consistent inventory policy
End the inconsistency between sites. One policy, one standard, one set of rules across the business.
Give your team clear rules for classifying and actioning surplus stock
No more ambiguity. The policy defines what excess means and what to do about it.
Every excess and obsolete inventory question people ask,
answered by a structured policy
Finance teams, supply chain managers, and CFOs searching for guidance on managing E&O inventory ask these exact questions. This policy guide gives you a documented, defensible answer to all of them.
A formal document defining how to identify, classify, reserve, and write off surplus or obsolete stock. It removes the guesswork from quarterly provisions and write-off approvals.
Apply a provision percentage to stock classified as excess or obsolete based on age and demand coverage. The policy sets those percentages so every site calculates consistently.
By forcing regular reviews and disposal actions, the policy reduces stock that ties up cash without generating revenue. Less dead stock means more working capital for productive uses.
Excess is stock above your required coverage level, still sellable, just too much. Obsolete is stock with no foreseeable demand. Both require different accounting treatment and disposal actions.
No. This policy covers all inventory categories under one framework. Thresholds can be set differently per category without needing separate documents.
Customise the Word document with global thresholds, name site-level role holders, and distribute the PDF. The policy is designed for multi-site deployment from the start.
Built by a practitioner who has managed
inventory write-offs across global operations
Before you buy
What exactly is included in this policy guide?
A 12-page Word and PDF document covering E&O classification, reserve calculation, write-off approval, roles, and continuous improvement. Fully editable.
Does this policy apply to all inventory types?
Yes. Finished goods, raw materials, WIP, and subcontractor-held inventory are all covered within a single policy framework.
Can I customise the thresholds and criteria?
Yes. The Word format is fully editable. Adjust coverage day thresholds, provision percentages, and role titles to match your business.
Is this policy aligned with IFRS accounting standards?
Yes. The framework references IFRS IAS 2 Inventories, so your provisions and write-offs meet international financial reporting requirements.
Can this be used across multiple sites or divisions?
Yes. The policy is designed for multi-site deployment. Name the role holders per site and distribute the PDF across all divisions.
What format will I receive after purchase?
Instant download of both Word (.docx) and PDF files. A download link is also sent to your email address after purchase.
Is this suitable for a small or mid-size business?
Yes. The policy scales from a single warehouse to a global multi-site operation. Adjust the approval thresholds to match your organisation's size.
Stop managing E&O inventory without a policy.
Download the SCMDOJO Excess and Obsolete Inventory Policy Guide and give your finance and supply chain teams a consistent, auditable framework, starting today.
Instant download · Word & PDF · 12 pages · Lifetime access · No subscription
