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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]

#261

Post by brookst »

Dylan16807 wrote: post #190
brookst wrote: post #10

Earlier quoted context omitted.

And yet, if you’re a big company, transactions are expensive. If small companies need frequent payments and won’t float AP, why would you buy from them? Would you rent an apartment that insisted on daily payments? (Ok, bad analogy, but you get the idea). I don’t have a good answer, but this isn’t a one-sided thing where the big guys are taking advantage of small companies. This is also small companies agreeing to ope…

By my reading of the story, upfront payment wouldn't have changed the number of payments. And forget about daily. It's very reasonable to want monthly pay, and should not be a burden at all. And monthly pay would need at most a month of float, on average probably less. That's not where the real payment issues are.

Yeah frequency of payments was an example, but kind of a red herring. Consider it as “running AP differently for a small subset of vendors” as an abstract concept. It’s expensive to do 5% of your business differently than 95%.

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

#262

Post by [deleted] »

sva_ wrote: post #54
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…

> It's 101 that wholesale buyers order by the case and for producers to specify the casecount and price, Not sure why you're being downvoted because thats standard in wolesale. Not sure how they couldn't catch that when looking at the price either. Maybe they thought they'd sell a lot less for the same price and aren't talking about this?

[deleted]

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

#263

Post by [deleted] »

lisper wrote: post #246
samwillis wrote: post #243

Earlier quoted context omitted.

There is undeniable an F-up on the producers part here, however I think you are assuming too much in your calculation. They don't say at any point the $250k order value was the initial order as they understood it. They explicitly state that they kept getting further orders past what they understood as the initial 6k units. I think what's happed here is that as the order kept a growing they took on more debt to fulfil…

Again, this is not possible unless they were complete morons. At some point they either had some idea of what they were going to be paid, at which point they should have realized that a unit could not possibly be a bag as they were assuming, or they did not, in which case they had no business being in business. There simply is no way to spin this so that this is not 100% their fault.

[deleted]

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

#264

Post by WastingMyTime89 »

jt2190 wrote: post #126
WastingMyTime89 wrote: post #76

Earlier quoted context omitted.

It’s basically a free short term loan from your suppliers who are eating the inflation instead of you. It does strain your suppliers but if your business doesn’t really need them and you can force them to accept it, why not? As a supplier, payment delay is basically a cost you have to bear to deal with large distributors. It’s a trade off between somewhat predictable volumes and cash flow availability. I would never…

> It’s basically a free short term loan from your suppliers... Honest question: Is this really a free loan, or is it the cost of the load hidden (i.e. the interest charges are not broken out explicitly)? For example, if a supplier has shipped goods with a wholesale prices of USD 100 to a retailer with a net 30 day payment term, I would assume that the USD 100 includes all of the costs associated with that USD 100, in…

I mean, yes, in a way. Suppliers are hopefully making money or they won’t be able to supply for a long time. On the other hand, large distributors love to include Most-Favoured-Customer clauses in their contracts so it’s often just an additional cost of doing business with them which has to be taken out of the margin.

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

#265

Post by Retric »

lisper wrote: post #258
samwillis wrote: post #252

Earlier quoted context omitted.

No one can make that judgment without seeing the paperwork. We don't know how it was written down. Also they are a really small business. 6k bags a year, their old volume, is only 23 bags per day (5 days week, 52 weeks)! Of course they were out of their depth, and very naive to how this all works. It's not fair saying they are morons and don't deserve to be in business though.

The only circumstance in which "how it was written down" might matter is if what was written down is different from what they said in the blog post. Which doesn't really help. There are only three possibilities: 1. The deal was written down, and it was, as they report, for 6000 units and $250,000 (modulo phraseology) 2. The deal was written down and it was not for 6000 units and $250,000 3. The deal was not written d…

My guess was one of these being far more likely:

1a) the deal was written down for ~6000 units and X$/bag.

2a) A price per bag was been negotiated and the deal was only estimated at 6000 units, but a total was never explicitly stated as it would depend on actual order. Each actual order is unambiguous and the numbers add up correctly.

Remember negotiation, order size, and billing are three different steps. Miscommunication is amazingly easy as people ask clarifying questions like “So you want 6000 units at 7$/bag?” Thinking holy shit 42,000$. And get answered “Yes” by someone thinking 7 * 6 * 6,000 = 252,000$ yea that adds up.

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

#266

Post by dtnewman »

lisper wrote: post #258
samwillis wrote: post #252

Earlier quoted context omitted.

No one can make that judgment without seeing the paperwork. We don't know how it was written down. Also they are a really small business. 6k bags a year, their old volume, is only 23 bags per day (5 days week, 52 weeks)! Of course they were out of their depth, and very naive to how this all works. It's not fair saying they are morons and don't deserve to be in business though.

The only circumstance in which "how it was written down" might matter is if what was written down is different from what they said in the blog post. Which doesn't really help. There are only three possibilities: 1. The deal was written down, and it was, as they report, for 6000 units and $250,000 (modulo phraseology) 2. The deal was written down and it was not for 6000 units and $250,000 3. The deal was not written d…

There's another possibility:

4. The initial deal was verbal or even written down, but not in a contractual way. i.e. they get an email saying, hey, we are going to follow up with multiple purchase orders that will total 6000 units

When the actual POs (which are more "legally binding" so they won't use ambiguous language or industry jargon) come in, they use language that specifies the exact number of cases + number of items per case + payment per case + total payment.

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

#267

Post by [deleted] »

lisper wrote: post #258
samwillis wrote: post #252

Earlier quoted context omitted.

No one can make that judgment without seeing the paperwork. We don't know how it was written down. Also they are a really small business. 6k bags a year, their old volume, is only 23 bags per day (5 days week, 52 weeks)! Of course they were out of their depth, and very naive to how this all works. It's not fair saying they are morons and don't deserve to be in business though.

The only circumstance in which "how it was written down" might matter is if what was written down is different from what they said in the blog post. Which doesn't really help. There are only three possibilities: 1. The deal was written down, and it was, as they report, for 6000 units and $250,000 (modulo phraseology) 2. The deal was written down and it was not for 6000 units and $250,000 3. The deal was not written d…

[deleted]

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

#268

Post by fbdab103 »

astrange wrote: post #177
reillyse wrote: post #135

Earlier quoted context omitted.

So I’d sell products to my customers (say bags of coffee) and then 30 days later come by their house (charge their credit card) to collect? This is a terrible idea. Half of the people wouldn’t have the money and your company would become a debt collection agency. You’d be forced to charge at least 3X for the product.

You’re already giving the customers net 30 by accepting credit cards. Offering BNPL/afterpay would be another way to do it.

No, the credit card company is on the hook for your debt and will pay the business. The credit card company will be the one coming after you in 30 days looking to be made whole.

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

#269

Post by projektfu »

sva_ wrote: post #6
Eleison23 wrote: post #2

When I was homeless, I found a job with a "call center". Our training consisted of teaching us the cover story and how to handle reactions to it. We began with a joke involving alcohol. Then if they didn't hang up we launched into the pitch: "We just lost our lease on our warehouse, and we've got to move all these pens. You can get them imprinted with your name and phone number for a bargain. What do you say?" I quit…

I am curious about the joke involving alcohol.

The answer was posted but for some reason was flagged. Did someone take offense?
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