Issue link: https://docs.hic.us/i/403552
This should take care of the majority of your customers. Even the Corporate buyers have credit cards. If a customer asks you for terms, ask them for a credit card. Mastercard and Visa will be glad to offer them terms. Of course, if you are accepting credit cards, you will be sacrificing a small percentage of each order to the credit card company. Be sure to compensate for this in your pricing system. Any of the above techniques is legitimate as long as you control the process. Another method that should be considered is a short-term loan from a bank. This should only be used for a specific project, not for general working capital. Short-term Loans You will usually find it easier to borrow short-term money than long term money. For example, suppose you have an order for 500 jackets that cost $30.00 each for a total of $15,000.00. You will be required to pay the full amount before shipping. No Distributor will ship this large of an order on credit or COD. So you will need to borrow the full amount. With proper documentation, a bank will generally loan you this amount for up to 90 days with a fixed amount of interest. This should provide you enough time to receive, sew, deliver and collect on the jacket order. In fact, if you do the production quick enough, you can even give the customer 30 day terms. Now you have used the banks money, not your own to finance the job. But no matter what rules you put in place, their will always be customers who demand that you give them payment terms. While it might be tempting to do this in order to get the clients business, be aware, that it might just bankrupt you as well. Once the customer has their order in hand and has left your shop, it's a lot harder to collect payment. In this case, you might need to consider Factoring Factoring Services Essentially, a Factoring Company is a financial institution that buys your accounts receivables. When you complete an order, you send the invoice to the Factoring Company, and they send you full payment minus a small percentage which is their cut. You typically receive this payment within 48 hours. From that point on, the Factoring Company is responsible for the invoice. They will bill your customer and give them 30 days to pay. Sounds easy, but there is more to it than that. For example, they do not arbitrarily take on every customer. They always run a credit check first. This concept sometimes alienates your customer, as it seems as if you don't trust them. Also, most Factoring Companies won't work with you unless you can send a minimum of $5000.00 worth of invoices per month to them. But overall, Factoring can be quite useful especially on larger jobs, where the amount of the invoice exceeds the credit limit on someone's credit card. www.hsi.us care@hsi.us 65