Payment Terms

Re: [spiers] Payment Terms


In a message dated 5/1/03 11:13:24 AM, carolfreire@earthlink.net writes:

However, most retailers told me that when they buy from a wholesale 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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