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Ask Dave

Mary Kay Inventory Debt?

Tara likes keeping her Mary Kay inventory stocked, but she should deplete her current inventory and pay off her loan before re-stocking.

QUESTION: Tara and her husband have a lot of debt.  One of the debts is a loan on Mary Kay inventory for $4,000.  Tara enjoys selling Mary Kay products and wants to keep her inventory stocked, but that means she’s operating out of debt.  Should she keep doing this or deplete her inventory and pay off the loan?

ANSWER: You should deplete your inventory and pay off the loan.  By the time you get to the end of the inventory you should be able to pay off this debt.

There’s a type of inventory process that big companies use called Just In Time.  These companies let the distributors house their products and they only order when they need the products – they order more just in time to get the products to the customer.  This is how you need to operate your business.

The major down side to what you’re involved in is that some of the higher-up managers expect their sales reps to go into debt to keep an inventory of products, which is what you’ve done.  Let Mary Kay carry the cost of the inventory.