Sell-Through Rate
Definition
The percentage of received inventory sold over a period, indicating how quickly stock moves. A high sell-through points to good demand or lean buying; a low rate signals overstocking.
Formula
Sell-through rate = Units sold ÷ Units received × 100
Related Terms in Purchasing & Inventory
Backorder
An order for goods that cannot be filled immediately because they are out of stock, but which the customer is willing to wait for. Managing backorders well preserves sales that would otherwise be lost to stockouts.
Goods Receipt Note (GRN)
A document confirming that goods ordered via a purchase order have been physically received and inspected. Part of 3-way matching (PO → GRN → Invoice) to prevent overpayment. HelloBooks has full GRN with validation rules.
Three-Way Matching
A verification process that matches the purchase order, goods receipt note, and vendor invoice to ensure you only pay for what was ordered and received at the agreed price. Prevents fraud and errors.
FIFO (First In, First Out)
An inventory valuation method where the oldest stock is sold first. During inflation, FIFO results in lower COGS and higher reported profits compared to LIFO.
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