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Decision chain · 02

Merchandise financial planning

Merchandise financial planning is the process of reconciling sales, margin, inventory, receipts and open-to-buy targets across time, category and channel.

Last reviewed

One plan, reconciled

Top-down financial targets and bottom-up demand rarely agree on the first pass. A useful MFP workflow exposes the variance and keeps sales, stock, receipts and margin mathematically connected while the team resolves it.

  • Sales and margin targets
  • Beginning and ending inventory
  • Receipts and open-to-buy
  • Plan, forecast and actual variance

From finance to the buy

Once the plan is agreed, its open-to-buy constrains assortment depth and purchase decisions. Later actuals flow back into the same view so the team can reforecast without building a second spreadsheet.

Questions

What is open-to-buy?

Open-to-buy is the amount available for planned inventory purchases after accounting for targets, current commitments and expected stock movement.

How is MFP different from a budget?

A budget states financial intent. MFP connects that intent to merchandise flows—sales, inventory, receipts, markdowns and margin—at the levels used to plan a season.