Giving Credit Can anyone help?

NorthernRed

Hi Guys,

Just wondering if anyone can help. I'm a partner in a small but succesful Beer and Wine Wholesale business. We have been trading for nearly 3 years with good growth, we make a profit pay the bills and me the other partner take a reasonable wage + monthly bonus, for all our hard work. Problem we have is we are starting to hit a bit of a wall, i do the selling and buying, and the large accounts i'm going for i can win because of our service and prices, problem is these guys want considerable credit (ie a month which can be in the region of 15K). We are happy to do this but we are not sure what information we would need if things were to go wrong and we had to go down the legal route. Has anyone had any experiance like this, and if so what information did you get to gurantee the payment, also if you had a gurantee where did you get the paper work from???

Many Thanks

NR

mikewebs

Can I suggest that you make sure that any contract of sale includes a ROMALPA clause (do a GOOGLE) which basically means the goods remain yours until they are paid for - this makes going in a siezing them much easier.

Also research you customer - ask to see their accounts see how much the ratio of current assets is to current liabilities to see how easily their assets could be liquidised to recover your money - ideally it should be at least 2:1.

Also make sure you establish and stick to a credit policy - if biggest customers are late paying you treat them according to your policy - but always try to keep things amicable. As far as going down the legal route, maybe look at factoring your credit sales ledger - you could get 80% of the value up front with the remaining 20% (less any fees) to come and you wouldn't have all the hassle of running yourself ragged to get that one late payment. BUT remember, you also lose control of your sales ledger doing this and some customers may not like it.

baldelectrician

Some of the electrical whole salers offer discounts off trade (usually between 40 and 90%) .
If you sell at trade prices and offer a discount if monies recieved by 40 days etc then it will help

My business usually offers labour at £75 per hour and applies a discount of 50 % on the invoice if paid within 7 days.