Published:
03/15/2013 10:32pm
Buying Power or Cash Power
In any business buying power plays a big part on the price you pay for stock you are going to sell on. If you buy 100 white shirts you are going to get a better price from the supplier than a small business buying 10 white shirts.
Being a small retailer you may not have buying power but you do have Cash. Heard the phrase, "Cash is King?"
Here is a way you can get discounts on stock and have a great reputation in your trade.
Let's turn this scenario on its head. You can not get a discount when you are buying the stock, how about getting discount when you pay for the stock?
The Maths
You are buying 300 Shirts a season from one supplier at $45 ( ex GST ) = $13,500
Contact your suppliers and ask then for a 7 days early payment discounts terms. They will be more than happy to get the cash for their goods they only delivered to you the week before. Start at 10% discount and see what you can get.
Don't just stop there, then ask for 14 days, 21 days and 30 days. Remember suppliers employ staff who constantly chase un-paid invoices every month, you don't want to be on that list.
If you get 10% discount for paying for stock in 7 days, in the example above you would save $1,350.
Many accounting packages like MYOB will let you set these terms up. You can view a report at the beginning of the week, which will show you Expiring Discounts and just ensure you try and pay them. It maybe a little tough to pay the initial few months you owe, but once you have caught up, you will be receiving discounts continuously through the year. Think what this will do for your bottom line at the end of the year.
Contact all your suppliers and ask for 7, 14, 21, 30 Days early payment discount terms. Print of a list of your Aged Creditors and try and consolidate, a little cash injection may help. Implement all the terms in your accounting package or inform your book keeper.
Following this simple method will reduce the pressure of paying suppliers at the end of each month. Your reputation in the business you are in will increase, attracting more suppliers, which means more variety of products to sell. Everyone wants good customers.
Hiten Thakrar is the first person you'll see when visiting Sydney's Zantini Menswear shop. Best known as "H," he is passionate about providing quality menswear as well as exceptional service and advice regarding how to be the best dressed man you can be. Visit www.ZantiniMenswear.com to receive "How to Look Great and Save Cash With Your Business Clothing," along with tips, tricks and some great menswear fashions.
