What is open to buy?

Open to buy is the budget still available to spend on inventory for a period, after accounting for what is already on order and the stock you plan to hold at period end. It converts a merchandising plan into a spending limit, so buying decisions are bounded by the plan rather than by enthusiasm.

Open to buy is a budget, not a cash balance. A plan can show room to buy while the bank account cannot fund it, which is why the two get checked together before a purchase order goes out.

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