Most small business owners understand that inventory is an asset, but few understand what role the daily cost of money plays in reducing the value of that asset over time. Small business owners need inventory to sell in order to meet customer demands, improve customer loyalty and capture sales. While it’s understood that inventory is an important part of business success, a number of small business owners often become too attached to their inventory. What does this mean? Simply put, a number of small business owners are reluctant to do what it takes to liquidate slow moving product. They retain original values to the inventory regardless of how long it’s held and rarely take the time to understand how the cost of money reduces the value of that inventory over time. Instead, they see the value of the inventory as constant and are therefore unable to reconcile selling the inventory for lower than its original cost. What they lack is an understanding of how the cost of money reduces that value. So, what is the cost of money and how does it reduce the value of inventory?