What percentage of OTB funds do many facilities typically keep in reserve?

Many facilities typically keep 10-25% of their open-to-buy (OTB) funds in reserve as a prudent financial management practice. This percentage allows facilities to maintain a balance between having enough funds available for purchasing new inventory while also safeguarding against unexpected expenses or fluctuations in sales.

Keeping a portion of OTB funds in reserve helps ensure that the facility can adapt to unpredicted market demands or opportunities without compromising its cash flow. This balance between liquidity and purchasing power is essential for successful merchandising operations, allowing facilities to respond effectively to seasonal trends and consumer preferences. In contrast, reserving a lower or higher percentage may either limit purchasing potential or create excessive constraints on available funds, leading to missed opportunities for growth or inventory replenishment.