The Real Cost of Expired Inventory Write-Offs (And How to Cut Them by 85%)

When a batch of product expires on your shelf, the obvious cost is the product itself. You paid for it. Now you're throwing it away.

But that's just the beginning.

Expired inventory write-offs have hidden costs that multiply the damage — and most businesses don't track them. Once you see the full picture, a $500 write-off starts looking a lot more like a $2,000 problem.

Here's what expiry waste actually costs, and how to cut it dramatically.

The Visible Cost: Product Value

This one's obvious. You bought inventory. It expired. You can't sell it.

If you're writing off $3,000 in expired product each month, that's $36,000 per year in direct losses. For most businesses selling perishable goods, that's a meaningful hit to margins.

But it's the cost everyone focuses on — while ignoring the costs that often exceed it.

The Hidden Costs Nobody Tracks

1. Labor Cost of Managing Expiry

Someone on your team is spending hours every week:

• Checking expiry dates manually
• Updating spreadsheets
• Reconciling inventory counts
• Pulling expired stock from shelves
• Deciding what to do with near-expiry inventory
• Running promotions or markdowns last-minute

That time has a cost. If your warehouse manager spends 5 hours per week on expiry-related tasks at $30/hour, that's $7,800 per year — just in labor.

And that assumes they catch everything. When they miss something, the costs escalate.

2. Disposal and Handling

Expired inventory doesn't just disappear. Someone has to:

• Physically remove it from sellable stock
• Document the write-off for accounting
• Handle disposal (especially for regulated products like supplements or cosmetics)
• Update inventory systems

For regulated products, disposal may require documentation, third-party services, or specific procedures. That's more time and potentially more money.

3. The Products You Couldn't Sell

Here's a cost most businesses never calculate: the margin you lost on products that expired instead of sold.

If a $20 product with 50% margin expires, you didn't just lose $10 in cost — you lost the $10 profit you would have made.

Write off $3,000 in product cost, and you may have lost $3,000+ in potential profit on top of it.

4. Cash Flow Tied Up in Dead Inventory

Inventory sitting on shelves is cash you can't use elsewhere. Inventory that expires is cash you'll never recover.

If you're regularly writing off expiring stock, you're essentially lending money to your warehouse — and never getting it back.

5. Emergency Promotions and Markdowns

When you realize a batch is about to expire, the typical response is a last-minute sale. Steep discounts. Flash promotions. "Use code EXPIRING for 40% off."

You move the product, but at a fraction of normal margin. A product that should have earned $10 profit now earns $2 — if you're lucky.

These fire-sale margins rarely show up in "expiry cost" calculations, but they should.

6. Customer Complaints from Expired Shipments

When expiry management fails completely, expired product reaches customers.

Then you're dealing with:

• Refunds and replacements
• Customer service time
• Negative reviews (brutal for supplements, food, and cosmetics)
• Potential regulatory complaints
• Brand damage that's hard to quantify but very real

One bad review mentioning "expired product" can cost you far more than the product itself.

The Real Math: What Write-Offs Actually Cost

Let's add it up for a mid-size business writing off $4,000/month in expired product:

And this doesn't include the opportunity cost of cash tied up in inventory that never sold, or the strategic costs of always being in reactive mode.

Why Write-Offs Happen (It's Not Just 'Too Much Inventory')

The obvious explanation for expired inventory is over-purchasing. You bought too much, it didn't sell, it expired.

Sometimes that's true. But more often, the problem is rotation failure:

You Have the Right Amount of Inventory — It's Just Shipping in the Wrong Order

This is the FEFO problem.

You receive a batch in January that expires in June. You receive another batch in February that expires in May. Under typical warehouse operations (FIFO — First-In-First-Out), the January batch ships first because it arrived first.

Meanwhile, the February batch sits there. By the time you get to it, it's expired.

You didn't over-order. You just shipped inventory in the wrong sequence.

Expiry Dates Aren't Visible at the Right Moment

Your team might know that batch #4521 expires soon. But does the picker know that when they're grabbing product for an order? Usually not.

Expiry dates live in spreadsheets, in someone's head, or on physical labels that require walking to the shelf to check. They're not integrated into the picking workflow.

So pickers grab what's convenient, not what expires first.

Nobody Sees the Problem Coming

By the time you notice a batch is about to expire, it's often too late to sell it normally. You're already in fire-sale mode.

What you need is visibility 30, 60, 90 days out — so you can adjust purchasing, run planned promotions, or prioritize certain batches before they become urgent.

Most businesses don't have that visibility until it's too late.

How One Distributor Cut Write-Offs by 85%

Daniel M. runs inventory for a mid-size supplement distributor processing about 1,200 orders per month. They were tracking 150+ batches across spreadsheets.

Before: $6,000/month in expired inventory write-offs.

The problems were familiar:

• Spreadsheets couldn't keep up with batch movements
• Pickers didn't know which batch to grab
• Near-expiry inventory wasn't visible until it was too late
• FEFO was "the goal" but not enforced

After implementing automated FEFO with expiry tracking: Write-offs dropped to under $1,000/month.

What changed:

• Every batch has an expiry date in the system
• Every order automatically gets assigned the earliest-expiring batch
• Pickers see the lot number — no guesswork
• Daily alerts flag batches expiring in 30/60/90 days
• Time to run promotions instead of throwing product away

The Three Things That Actually Reduce Write-Offs

1. Automatic FEFO (First-Expired-First-Out)

Stop relying on pickers to know which batch expires first. The system should assign the earliest-expiring batch to every order automatically.

This alone prevents most rotation-related write-offs.

2. Expiry Visibility Before It's Urgent

You need to see which batches are at risk 30, 60, 90 days out — not the week before expiry. That gives you time to run planned promotions, adjust purchasing, or prioritize batches in marketing.

Daily or weekly expiry alerts based on actual sell-through velocity let you act early instead of reacting late.

3. System-Enforced Expiry Blocking

When a batch expires, it should be automatically blocked from being sold. Not flagged for review. Not dependent on someone remembering to pull it. Blocked.

This prevents the worst-case scenario: expired product reaching customers.

What This Looks Like in Practice

TraceLot adds batch tracking and expiry management to Veeqo. Here's how it addresses write-offs:

• Automatic FEFO: Earliest-expiring batch assigned to every order. Pickers see the lot number in Veeqo.
• Expiry alerts: Daily forecasts showing batches at risk in 10/30/60/90 days, based on order velocity.
• Expiry Firewall: Expired batches automatically zeroed out in Veeqo. Can't be sold.
• Promotion timing: See at-risk batches early enough to run promotions instead of write-offs.

Setup takes about 10 minutes. No workflow changes for your warehouse team — they just see lot numbers in Veeqo order notes and pick accordingly.

The Bottom Line

Expired inventory write-offs cost 2-3x what most businesses think when you count labor, lost margin, markdowns, and customer issues.

Most write-offs aren't caused by over-purchasing — they're caused by shipping inventory in the wrong order and not seeing expiry risk until it's too late.

Automated FEFO, expiry visibility, and system-enforced blocking can cut write-offs by 85% or more.