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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]

#201

Post by Waterluvian »

nlh wrote: post #188
manv1 wrote: post #161

Inventory financing is a severe pain in the ass for small businesses. It makes moving up to the next level incredibly difficult. Math example: You sell something for $20, and it costs you $5. You have free shipping, which costs you $3. Shop and CC fees are maybe $2, so you're netting $10. Then taxes means you net $6. So if you sell 10,000 units you've netted $60k. But to make that $60k you need to spend $50k up front…

The realities are brutal indeed BUT we should all be using the right terminology here: This is all about cashflow. When you say: > So you use money from the 60k in "profit" to buy inventory, leaving you no profit. That is incorrect. The business still has made a $60k profit, but they have no CASH since they had to redeploy that cash toward additional inventory (which leads to additional profits). > At that point you…

I imagine there’s reasonably priced financial products like business lines of credit, especially if you’re demonstrating a revenue stream and your only issue is cash flow. Ie. You’re not borrowing money for big capex things like renovating a restaurant. Of course nothing is guaranteed. That second batch of coffee may not sell.

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

#202

Post by lazide »

nlh wrote: post #188
manv1 wrote: post #161

Inventory financing is a severe pain in the ass for small businesses. It makes moving up to the next level incredibly difficult. Math example: You sell something for $20, and it costs you $5. You have free shipping, which costs you $3. Shop and CC fees are maybe $2, so you're netting $10. Then taxes means you net $6. So if you sell 10,000 units you've netted $60k. But to make that $60k you need to spend $50k up front…

The realities are brutal indeed BUT we should all be using the right terminology here: This is all about cashflow. When you say: > So you use money from the 60k in "profit" to buy inventory, leaving you no profit. That is incorrect. The business still has made a $60k profit, but they have no CASH since they had to redeploy that cash toward additional inventory (which leads to additional profits). > At that point you…

Notably, with cost of money rising, I’d expect a non trivial percentage of existing business models and businesses to no longer be viable because of this.

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

#204

Post by tapatio »

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…

[flagged]

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

#205

Post by astrange »

The coffee supply chain seems to have a lot of people claiming to add value who don’t really.

Does this business need to be saved because the customer really cares they specifically roasted and bagged some beans they got?

No, the coffee bush did all the work. And yet we never meet or thank it. (The farm workers go second. The James Harrison video you learned your coffee making technique from is third.)

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

#206

Post by chasd00 »

imroot wrote: post #13
jraby3 wrote: post #7

Earlier quoted context omitted.

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.

A tangent but what were you selling if i may ask? I'm developing a little bluetooth device that lots of people in a large hobby would find interesting and was fantasizing about pitching the prototype to a reseller.

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

#207

Post by tapatio »

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…

90 day "credit" terms are typical across many industries. Yes, it sucks, but also, it's a reason to not over extend yourself while trying to get to the next level.

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

#208

Post by vel0city »

brookst wrote: post #92
okr wrote: post #55

Earlier quoted context omitted.

I liked the example, it illustrates it from a different perspective. However, why not paying daily? Hourly? Minutely? In the age of computers...

Even in the age of computers each transaction has a cost and a risk associated. And there is no upside to large companies. They don’t want to receive per-minute payments any more than they want to send them. So if 95% of a business’ volume works one why, why invest in making 5% different just to deal with smaller vendors, who are already more difficult to deal with (for 100% good reasons).

Right? Even cloud computing companies which technically charge you per-minute pricing end up rolling it into a single monthly bill at the end of the month instead of a CC transaction literally every minute.

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

#209

Post by programmarchy »

monero-xmr wrote: post #176
dangero wrote: post #87

Earlier quoted context omitted.

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)

Can you sue them? People pretend it’s impossible to sue a large company but that is absolutely false, even for a few thousand dollars.

A few thousand dollars wouldn't be worth the time.

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

#210

Post by gamblor956 »

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…

My ($x billion+-sized) employer pays vendors within 2 business days of the invoice being submitted through the internal payment process, regardless of whether the payment terms allow for us to do net-30 or net-60. It doesn't meaningfully affect our cash flow to delay payment, but it makes a huge difference for our vendors. As you've noted, a delayed payment can literally be the kiss of death for a small company.
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