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Distributor cancelled an order and we need to move 30k bags of coffee [updated]

modest.coffee

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Re: Distributor cancelled an order and we need to move 30k bags of coffee [updated]

#11

Post by CamelCaseName »

georgeburdell wrote: post #3

One thing that irks me about dealing with big businesses, that the post touches on, is payment terms. If I buy an item, I pay for it immediately (or if it’s large enough, a creditor pays for me). Big companies pay with IOUs that say they’ll give you cash later, say 30-90 days from now or after criterion X is fulfilled. They do not care if you’re a small company with poor liquidity. I think it’s absolutely abusive beh…

Yup, and not just that, but they can arbitrarily decide to not pay you until you either give a steep discount or give up pursuing it.

Re: Distributor cancelled an order and we need to move 30k bags of coffee [updated]

#12

Post by convolvatron »

jraby3 wrote: post #7
georgeburdell wrote: post #3

One thing that irks me about dealing with big businesses, that the post touches on, is payment terms. If I buy an item, I pay for it immediately (or if it’s large enough, a creditor pays for me). Big companies pay with IOUs that say they’ll give you cash later, say 30-90 days from now or after criterion X is fulfilled. They do not care if you’re a small company with poor liquidity. I think it’s absolutely abusive beh…

That’s more specific to the food business. I run an advertising company and we always take payment in advance and work with several large (publicly traded) companies.

more specific to the physical goods business. if we establish a relationship where I'm regularly ordering merchandise from you - invariably we set up a regular billing cycle w/ a 30 day payment-from-invoice.

Re: Distributor cancelled an order and we need to move 30k bags of coffee [updated]

#13

Post by imroot »

jraby3 wrote: post #7
georgeburdell wrote: post #3

One thing that irks me about dealing with big businesses, that the post touches on, is payment terms. If I buy an item, I pay for it immediately (or if it’s large enough, a creditor pays for me). Big companies pay with IOUs that say they’ll give you cash later, say 30-90 days from now or after criterion X is fulfilled. They do not care if you’re a small company with poor liquidity. I think it’s absolutely abusive beh…

That’s more specific to the food business. I run an advertising company and we always take payment in advance and work with several large (publicly traded) companies.

I know of a few retailers that operate on Net 270 terms for their smaller vendors (Looking at you, Home Depot) and Walmart would tell us that they would reset the 'calendar' if we would call and ask for the status of a payment.

This was 2003-2006ish, for the record.

Re: Distributor cancelled an order and we need to move 30k bags of coffee [updated]

#14

Post by hgsgm »

jraby3 wrote: post #7
georgeburdell wrote: post #3

One thing that irks me about dealing with big businesses, that the post touches on, is payment terms. If I buy an item, I pay for it immediately (or if it’s large enough, a creditor pays for me). Big companies pay with IOUs that say they’ll give you cash later, say 30-90 days from now or after criterion X is fulfilled. They do not care if you’re a small company with poor liquidity. I think it’s absolutely abusive beh…

That’s more specific to the food business. I run an advertising company and we always take payment in advance and work with several large (publicly traded) companies.

Amazon's retail profit comes from investor the money they postpone paying suppoiers until 30+days after the customer pays Amazon.

Re: Distributor cancelled an order and we need to move 30k bags of coffee [updated]

#15

Post by HillRat »

johnchristopher wrote: post #4

> Then, 3 weeks into the process, with the orders still coming, Marcus pointedly asked him about why they were ordering so much more than the 6,000 bags they had originally predicted. The food broker laughed and said “I wondered why you’ve been so upset and concerned. When they said ‘units’, that was cases. They’re right on target so far.” You can imagine how we felt in that moment, realizing that the person we hired…

One thing that I came back to time and time again while consulting is that most operational problems are, in whole or in part, language problems, in the Wittgenstein sense. I worked with a lot of clients to define and document “linguistic boundaries” in their organizations where terms could abruptly change their meanings, and then used that to help silos communicate more effectively with each other.

Re: Distributor cancelled an order and we need to move 30k bags of coffee [updated]

#17

Post by AlbertCory »

Sigh. Big business vs. the little guy.

I recall when I took basic accounting, we learned that common payment terms were "2/10, net/30" meaning "2% off if you pay within 10 days, and it's all due within 30 days."

So it was common practice to wait 30 days (or more) and still take the 2% off.

This is in no way blaming the victim, but "for a total of $216,000 in debt" I would hope I'd just say, "no, we're not doing that." One of those hard calls that nothing in business school can prepare you for.

Re: Distributor cancelled an order and we need to move 30k bags of coffee [updated]

#18

Post by ThunderSizzle »

jraby3 wrote: post #7
georgeburdell wrote: post #3

One thing that irks me about dealing with big businesses, that the post touches on, is payment terms. If I buy an item, I pay for it immediately (or if it’s large enough, a creditor pays for me). Big companies pay with IOUs that say they’ll give you cash later, say 30-90 days from now or after criterion X is fulfilled. They do not care if you’re a small company with poor liquidity. I think it’s absolutely abusive beh…

That’s more specific to the food business. I run an advertising company and we always take payment in advance and work with several large (publicly traded) companies.

I don't believe it's "the food business" as much as "suppliers" in general. I know non-food industries that operate this way, and it's common enough that accounting classes I've taken covered some of the basics of these.

Advertising or informational industries (e.g. non-tangible goods industries) seem to operate differently, as you've said.

Re: Distributor cancelled an order and we need to move 30k bags of coffee [updated]

#19

Post by davidmurdoch »

treis wrote: post #5

This doesn't really make a lot of sense. How can bags be mistaken for cases when negotiating a deal? The price would be different by an order of magnitude. Why would orders trickle in like this if the product isn't getting shipped from the distributor and sold? Maybe I'm overly cynical and wary of things on the internet but somethings not adding up here.

It probably went something like "we can do $5.00 per unit, sold in cases of 6"

"Ok, we'll order 6000 at that price"

Re: Distributor cancelled an order and we need to move 30k bags of coffee [updated]

#20

Post by kioleanu »

treis wrote: post #5

This doesn't really make a lot of sense. How can bags be mistaken for cases when negotiating a deal? The price would be different by an order of magnitude. Why would orders trickle in like this if the product isn't getting shipped from the distributor and sold? Maybe I'm overly cynical and wary of things on the internet but somethings not adding up here.

probably

„Can you move 6000 units?”

“Yes we can move 6000 units at 10$ per pound”

“Sounds great, get them going!”

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