This section of the forum is for discussing the business and finance issues of the t-shirt industry. Which business structure to use (sole proprietor, LLC, S Corp, etc), how to handle billing, where to register your business and get the proper licensing, etc.
I recently touched based with a big retailer to get some general questions answered. I did not give them any of my info or anything...I just wanted an understanding. The buyer told me that "OUR TERMS ARE NET60". What does this mean? Does it mean that they will pay me 60 days AFTER they receive my merchandise or what? Also, is it weird that THEY can set the terms and not me?
It's not too weird for them to set terms, since they are big like you said. If they have plenty of people/companies wanting to work with/for them, they can do what they want. Yes, it's usually net 30. I believe I have seen net 90 and up sometimes.
Net 60 is not unheard of but, yes, it is a long time. Keep in mind that there are many other issues that you need to know about not just the 60 day terms. If they are big sometimes they will ask for markdown money, ad money, warehousing discounts, etc. Also, find out if you need to be EDI compliant to work them. If you aren't then they will tack on another charge.
As you can see all of these will eat into your profits.
You may want to start looking into getting a factor involved if you are going to be dealing with bigger companies.
I have a store that I supply with product and they now have gone to net 180 or they just turn you away. They told me that there are so many printers that want them to sell there product that this is the way they are going from now on.
Well, with them being a big retailer, do you think that their accounts payable will be more professional and get me my money in a timely fashion? My aunt supplies sundresses, blouses,etc for a similar company and they usually order in large quantities in between 3,000-5,000 items. That would be ALOT of money if they wanted a similar amount to invest and not get paid for it.
Well, with them being a big retailer, do you think that their accounts payable will be more professional and get me my money in a timely fashion?
No, I don't. I don't deal with anyone that big, but everything I've heard and experienced is that the larger the company, the longer they take.
Basically the larger the company the more they think they can do whatever they want and anyone smaller than them just has to put up with it. "You need us more than we need you" and all that.
Well, with them being a big retailer, do you think that their accounts payable will be more professional and get me my money in a timely fashion? My aunt supplies sundresses, blouses,etc for a similar company and they usually order in large quantities in between 3,000-5,000 items. That would be ALOT of money if they wanted a similar amount to invest and not get paid for it.
Unfortunately in this day and age, retailers, especially big ones, want to use your money to finance their business and with a lot more of the big boy manufacturers willing to give terms to the big box stores to turn their inventories it makes it just that much harder for you to get paid on time.
Will they pay you on time? I doubt it. Especially if you're dealing with the Federated Group which are notorious for not paying their vendors on time if at all. I've heard many horror stories from friends of mine that have dealt with them but then again I have a few that love working with them. I guess it depends on the situation and how well your product sells(read how important you are on the food chain to them).
Since you're starting out I highly doubt that they would commit to that many units in the beginning. More than likely they'll do a flagship store buy and order around 600 units. They'll do that for around 4 or 5 orders until their comfortable with the fact that sell through is good and you can deliver on time. After that they may do an all store buy and order around 2400 units, etc.
Does it mean that they will pay me 60 days AFTER they receive my merchandise or what?
In a classic accounting sense, that would mean they would pay you within 60 days of the "invoice date". But it doesn't sound like they mean 60 days of the invoice date *or* receipt date. Sorry to hear. Best wishes.
In a classic accounting sense, that would mean they would pay you within 60 days of the "invoice date". But it doesn't sound like they mean 60 days of the invoice date *or* receipt date. Sorry to hear. Best wishes.
They are offering to buy at that term of sale. You can accept, reject, or counter.
I personally would quote them Net60, Net30/2, Net10/3 and build the cost into the net 60.
This means that if you sell them $1000 they pay you Net 60 (60 ish days from invoice date)
If they pay you in 30 days they deduct 2%
if they pay you in 10 days they deduct 3%.
Add 15 days to the numbers for a realistic goal of when you should be paid by to account for holidays, delays, approvals, and check run dates.
Many companies will pay discounts early.... so it's just a matter of when you want to be paid and how bad you want to make the sale.
Your product has to have sell through and markup to have value to them.
This of course is just the financial side, you have to comply with all their terms still such as EDI, floor-ready merch, tagging, UPCs, etc. You might ask for a vendor checklist to make sure you can or want to comply with all their requirements.
the alternative is to sell to smaller customers who have less risk.
Net 90+ is also called net never. GM and Chrysler are on Net never right now. You will probably not get paid if you sell them anything..... and if you sell something to one of their key suppliers you run the same risk.
I prefer to sell to credit card customers and let someone else take the risk of non-payment. Cash flow problems will kill you in a hurry, especially in this economy.
net30 usually means at the end of the month following so items invoiced on Jan 1st & 30th both get paid at the end of Feb. That tends to be the end of March...
It means they will pay the full balance 60 days after they receive an invoice, and no, it's not wierd that they will tell you how they will pay. There's a reason why they are the big retailer. You are just a little vendor in a pool of many other little vendors.
Retailer has terms of Net60? 
Re: Retailer has terms of Net60? 
