Right now, most apparel brands are finalizing spring purchase orders. The open-to-buy plan says what to buy, by category and by month, based on a sales plan. What it usually does not say is when the cash leaves, when it comes back, and whether the business can carry the gap if the season sells slower than planned.
That gap is where good brands get into trouble. Not because the product is wrong, but because the buy was approved in units and dollars of inventory, and nobody translated it into weeks of cash.
What open-to-buy planning gets right, and what it misses
Open-to-buy (OTB) is the merchandising discipline of planned sales, plus planned ending inventory, minus beginning inventory and what is already on order. Done well, it keeps you from overbuying a category and gives the buying team a budget to work against.
But OTB is an inventory plan, not a cash plan. It is built on retail or cost dollars by receipt month. Your bank account runs on a different calendar: factory deposits at PO, balances at shipment, freight and duty on landing, and wholesale receivables that come back 60 or more days after the goods ship. The two calendars can be four to six months apart.
An illustrative spring buy, on the cash calendar
Take a $12M brand placing a $1.8M spring buy at FOB cost. This is an illustrative example, not a client result:
December: 30% factory deposit at PO — $540K out.
February: 70% balance at shipment — $1,260K out.
March: freight and duty on landing, assumed at 12% of FOB — $216K out.
Total landed cash out by end of March: $540K + $1,260K + $216K = $2,016K.
Cash back: DTC sells through March to June; wholesale ships March and April on net 60 terms, so most of that cash lands May through July.
Put that in cash conversion cycle terms. With roughly 150 days of inventory, 45 days of receivables, and 30 days of payables:
Cash conversion cycle = DIO + DSO − DPO = 150 + 45 − 30 = 165 days.
That is more than five months where about $2M of cash is sitting in boxes, in transit, or in a retailer's payables queue. The OTB plan did not show that. The bank balance will.
Where the plan breaks: sell-through
The buy assumed a full-price sell-through rate. Say the plan was 65% and the season delivers 55%. Ten points on $2,016K of landed cost is about $202K of inventory (0.10 × $2,016K) that does not convert to cash in season. It turns into markdowns, off-price, or carryover, and it ties up working capital right when you need to place deposits for fall.
Add wholesale chargebacks and returns, which reduce what you actually collect, and a brand that looked fine on the P&L can find itself drawing hard on its revolver or asset-based line in May.
The fix: put a cash overlay on the OTB
This is a core part of what a fractional CFO does for an apparel brand. The mechanics are not complicated, but they have to be built and maintained:
Translate the OTB into payment dates. Every PO gets its deposit, balance, freight, and duty mapped to the week it actually hits the bank.
Layer it into a 13-week cash flow forecast, rolled weekly, with wholesale collections modeled on real customer payment behavior, not invoice terms.
Check it against your borrowing base. If you finance inventory or receivables, availability moves with eligible collateral. Know your headroom before the balance payments land, not after.
Set sell-through triggers. Decide in advance what happens if a category runs five or ten points behind plan: cancel or push open POs, shift units to DTC, or pull a markdown forward.
Run a downside case before you sign the POs. If 55% sell-through breaks your covenant or your cash floor, the buy is too big or the terms are wrong. That is a conversation to have with the factory now, not in April.
Where automation helps
The weekly part is where most brands fall down. Pulling sell-through from Shopify and retailer reports, updating open POs, and re-forecasting cash by hand takes hours, so it gets done monthly at best. AI-enabled workflows can pull those feeds automatically, refresh the forecast every week, and flag only the categories drifting off plan. Early adopters of AI in finance report up to 90% fewer errors and month-end close dropping from roughly 12 days toward 3, which means the numbers you steer the season by are current instead of a month old.
The judgment still sits with people. Software can tell you knits are eight points behind plan. A CFO who has run apparel finance tells you whether to cancel the June delivery, move it to DTC, or hold and take the markdown.
A five-minute test before your next deposit goes out
Ask your team one question: on what date does our cash balance hit its low point this spring, and by how much does it move if sell-through comes in ten points light? If the answer takes more than a day to produce, or comes from the merchandising plan rather than a cash forecast, your buy is approved but not funded.
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