Payment Terms

Re: [spiers] Payment Terms

Hi John,

I took your course and did the homework. I asked for the catalog and
pricelists of all major competitors and I got their terms of conditions for
sales.
So, let's go one step at a time. From what I researched, the standard terms
for the gift and home accessory industries (including handcrafted products)
are:

First orders: C.O.D or prepay
Reorders: credit cards or Net 30 days upon credit approval.

Few competitors offer the option 60% onto Order and 40% onto Delivery. Some
give discount (3%) if invoice is paid after 10 days.

My suppliers ask for 50% in advance and 50% on delivery, but some retail
stores I talked to (potential clients) told me they won't be willing to do
that. They prefer to pay by credit card, Net 30 or onto delivery.

I am thinking of accepting credit cards, 50% - 50% or prepaid. Will I be
losing sales from the few potential clients who want the benefit of Net 30
days?

Carolina

----- Original Message -----
From:
To:
Sent: Thursday, May 01, 2003 8:59 PM
Subject: Re: [spiers] Payment Terms


>
> In a message dated 5/1/03 11:13:24 AM, carolfreire@earthlink.net writes:
>
> <their
> first order is C.O.D. or prepaid. But after the second order they get Net
30
> days upon credit approval.
>
> Recall How I say make sure you get the catalog and pricelists of all your
> "competitors"? Included in the catalog and price list is the "terms of
> conditions of sale." I gave an example of gift and housewares in the
book.
>
> The key thing here is to adopt the terms of condistionsof sale of your
> competitors as YOUR terms of conditions of sale. The process of buyiing
from
> you ought never be any different than buying from your competitors. The
idea
> that you can provide better quality or service as a competitive feature is
a
> pipe dream, the industry collectively sets a standard thru exp[erience
that
> is adopted by all... more service or quality and you are wasting money,
less
> and people wont deal with you. So learn what the terms and conditions a
> re for your industry, and make them yours.***
> Questions:
>
> 1) What is C.O.D.?
>
> ***Cash on delivery...sounds good but it rarely works in real life. I
would
> not use this, but again, what is standard for your industry? (If the
buyer
> refuses caSh on delivery, you end up eating freight out and back in.)***
>
> 2) My suppliers ask for 50% in advance and 50% on delivery. The
> suppliers are artisans and small cooperatives in South America, so that if
> they don't receive a percentage in advance they don't have the money to
buy
> the raw materials.
>
> ***These are attractive terms***
>
> I want to work according to my clients needs, but I don't want (and I
can't
> take the risk of financing them.) I know that we importers are
insignificant,
> so I am afraid of losing clients if I don't offer payment terms that match
> their needs. What should I do??>>
>
> ***You have to offer payment terms that match industry standards. You
dont
> have a choice. First find out what those are, then work up what it will
cost
> to handle minimum order deals. From there, you can determine just what
you
> are "Risking"...once you have this figure, you can spread the risk by
finding
> a financial backer. Now, keep it simple, one step at a time... if you
will,
> report back what the standard terms are for your industry. Then we can
take
> this one step at a time.***
>
> John

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