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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]

#81

Post by dylan604 »

Waterluvian wrote: post #34
jjeaff wrote: post #24

Earlier quoted context omitted.

I remember in a corporate finance class in college, we did a lot of calculations comparing prepayment to net 30, net 90 terms, etc. The game is to maximize cash flow, though in the end, it doesn't make a lot of difference except in very thin margin businesses. But the general wisdom is to always try to take maximum advantage. I always felt that it is a silly strategy considering that it strains your suppliers, provid…

It sounds like that classic “focus on the things that can be measured easily” business finance attitude that causes things like “don’t kill your customers” to be missed.

Too bad "don't kill your suppliers" isn't a thing.

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

#82

Post by nerdawson »

sva_ wrote: post #62
viburnum wrote: post #16

I can't put my finger on it exactly but there's something about this story that isn't making sense.

Hint: At the point at which they agreed to sell 6000 units, they must've agreed to a price for those units. Then later they figured out that the trader meant cases and upped the number. I'm thinking they expected to get paid about 6 times more (6 packs per case) ...

That's not the way I read it.

Like you said, they must have agreed a per unit price. The mistake had to have been purely in volume.

When they recognised the mixup with cases / bags, they wouldn't have pushed to deliver the actual expected volume had the unit pricing been a problem.

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

#83

Post by 88913527 »

asah wrote: post #21

It's 101 that wholesale buyers order by the case and for producers to specify the casecount and price, and for errors like this to be caught when the prices/etc don't line up. This is equivalent to not knowing that URLs can redirect, or that http:// and https:// aren't the same thing. Distributors work with 1000 brands each and don't have time (or margin) to babysit. Also, when a company gets a much larger and differ…

You would expect the consultant to explain this to the small business owner, who isn't the SME.

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

#84

Post by interactivecode »

jjeaff wrote: post #24
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…

I remember in a corporate finance class in college, we did a lot of calculations comparing prepayment to net 30, net 90 terms, etc. The game is to maximize cash flow, though in the end, it doesn't make a lot of difference except in very thin margin businesses. But the general wisdom is to always try to take maximum advantage. I always felt that it is a silly strategy considering that it strains your suppliers, provid…

I would love it if the EU or government would enforce equal payment terms for whole company. Lets say a shop wants to have a net 30 terms with their suppliers, then they should also offer net 30 terms for their customers.

This would equalize power dynamics. The large corp shouldn’t be allowed to demand immediate payment on one side and then just significantly delay payments on the other side.

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

#85

Post by cjbgkagh »

AlbertCory wrote: post #17

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.…

Many people don’t have great options and see such opportunities as possibly their only chance for a big break.

They’re playing in the big-leagues and needed the kindness of strangers to bail them out of what appears to be their mistake as going by other comments units as cases are industry standard. That the distributor couldn’t move the product compounded the issue. Supplier/distributor shenanigans are common and something to be on the constant lookout for, but this seemed pretty normal, the prudent thing to do would be to not have signed up for so much but of course they didn’t know they did. Pulling the pin early might have helped, as it wasn’t selling they wouldn’t be liable for damages for failure to supply, but it would have impaired their ability to grow.

Not suggesting those here did anything nefarious beyond overextending by mistake but there does seem to be a new trend in e-begging where someone gets themselves into a situation and seeks a bailout from social media. “Help I accidentally bought a $100K couch” for example.

I don’t blame people doing something that’ll help them. I often wonder if I were to get terminally ill and there is an expensive cure beyond my ability to pay what my go-fund-me video would look like.

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

#86

Post by yieldcrv »

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…

I've seen this even worse outside of the US, and just how ... poor trade routes, trust and "markets" are.

It really makes me appreciate the US more. But I am still dismayed that I'm all caught up on the state of commerce and that its not even more streamlined and sophisticated.

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

#87

Post by dangero »

300bps wrote: post #77
anon223345 wrote: post #69

My friends company (software consulting) got a contract with Amex, super excited Took months for them to even respond to emails about their invoices, they never ever paid on time or even a month a late Dealing with giant firms is the worst and there’s nothing you can do as a small vendor besides having your game tight upfront and if you do have your game tight upfront they won’t hire you in most cases

I was buying a house many many years ago at a time I was self employed. I owned a computer company and my largest client put in an order for 20 computers. They had Net 30 terms with me so I said to them, "I'm very sorry, I am buying a house and can't float the money for 30 days. I can refer you to someone else to buy them from." The general manager of the company told me it was no problem, send the invoice directly t…

Glad they actually paid. I've had similar situations where I'm still waiting for the money 5 years later (I know it's never coming)

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

#88

Post by asah »

88913527 wrote: post #83
asah wrote: post #21

It's 101 that wholesale buyers order by the case and for producers to specify the casecount and price, and for errors like this to be caught when the prices/etc don't line up. This is equivalent to not knowing that URLs can redirect, or that http:// and https:// aren't the same thing. Distributors work with 1000 brands each and don't have time (or margin) to babysit. Also, when a company gets a much larger and differ…

You would expect the consultant to explain this to the small business owner, who isn't the SME.

sigh, I know. But food brokers are outsourced commissioned reps and not strategic thinking shareholders. Food brokering is a tough business and many are (shall we say) not that great, and very few think strategically.

(I do know some great ones, btw)

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

#89

Post by analog31 »

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…

It's worse than that because they will drag out payment after the term has passed.

My first job out of school was for a mom-and-pop manufacturing company. I got an inquiry one day from a very well known company, and mentioned it to the boss. He gave me a long lecture about why we didn't work with that industry. They were notorious for stringing their suppliers along and holding them in a sort of debt bondage. I remember responding with a FAX (yeah, that's how it was done) explaining our terms: Pay in advance. The boss made sure that the business was never beholden to a single large customer.

We also had a draconian, hair-trigger, credit hold process. I remember overhearing the scheduler / receptionist telling a customer: "You are on credit hold right now, we can't schedule your next production run."

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

#90

Post by timerol »

maxerickson wrote: post #44
timerol wrote: post #36

Great to see that all of these got sold! The numbers in this story don't exactly line up, in a way that tells a fun and clearly stressful story: (The cases have 6 bags each.) The intro to the blog post mentions 34k bags of coffee actually made. The initial order was thought to be 6k bags of coffee, but was actually 6k cases = 36k bags of coffee. So it looks like some got sold off between the delivery fiasco and the b…

The leftover bags are decaffeinated.

Thanks! I updated my comment at a few points.

The numbers still don't quite add, given 24k bags sold + 634 cases of decaf still for sale (= 3804 bags) is still under the initial 30k bags. But I suppose 2k bags of decaf could have easily sold in the meantime.

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