Cash Injection - Big Sale with Low Stock, Take Time to Return Payments. Happens Y/N?

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  Muzeeb on 16/12/2019 - 22:57

  Can you put a possibly option?

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  [Deactivated] on 16/12/2019 - 23:04

  In what universe do you see a company employing the above technique and it being successful?
  Next you'll be posting hypothesising that the world isn't flat.

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    phila63 on 17/12/2019 - 08:12

    This universe and would it be successful? Maybe yes. Maybe no. How many factors need to be take into account?

    People did hypothesise the world was flat and others with open and inquiring minds took it upon themselves to explore and ultimately prove otherwise.

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  kipps on 16/12/2019 - 23:14

  In my experience companies with cash flow difficulties are more likely to be offering discounted gift cards to get cash in the door. What you are proposing would very much depend upon inventory turnover and a business with that much of an idea of turnover probably has better inventory management than to get caught out cashflow wise.

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    phila63 on 17/12/2019 - 08:15

    Good point re gift cards. Maybe the inventory management is not that flash?

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  Kenb0 on 16/12/2019 - 23:23

  Did you get this idea from the recent Myer double-dip sale?

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    phila63 on 17/12/2019 - 08:15

    No, not aware of the Myer double dip

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  iforgotmysocks on 17/12/2019 - 00:03

  Ok

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  MITM on 17/12/2019 - 01:18

  How much cash injection is needed ?

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    phila63 on 17/12/2019 - 08:16

    It's a hypothetical about a supplier that my client deals with.
    FYI - my business is services only

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  Meho2026 on 17/12/2019 - 04:34

  +2

  I think that’s trading while insolvent, company directors can face criminal charges
  https://asic.gov.au/regulatory-resources/insolvency/insolven…

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  RockyRaccoon on 17/12/2019 - 05:46

  +3

  I hope you are not studying for a business degree?

  Do you understand costs of running a business?

  Every order taken involves not just taking something off the shelf, and selling it, putting money in pocket and going to the local pub and looking rich.

  Very soon you would find it’s far easy to take the money and run rather than make a business based on returning money held for a few days.

  Have you any savings. Most banks give .05% if that on business accounts and charge for transactions. So they will pay more for a credit card transaction than they get in interest .

  Then there’s the labour cost of processing the fake order, then refund etc. Complicated BAS statements, accounting and audit fees.

  Running a business isn’t like you putting money into piggy banks.

  That’s why most fail

  And most business people who succeed, either had some mentoring, or made mistakes earlier. Called life experience.

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    phila63 on 17/12/2019 - 08:22

    +1

    Edited my original post to add some context.

    Yep, my client and I both understand the costs of running a business, as we both do it.

    We were discussing why the supplier has done this at least 5 times in 18 months for the same product item. Surely they know the items are going to sell quickly based on previous promos and should be able to monitor their inventory/order ratio.

    Re labour costs, maybe their costs for processing etc is inhouse or low overhead, maybe even automated to a large degree. Given they have done this 5 times, they have processing all sorted :-)

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      RockyRaccoon on 17/12/2019 - 09:54

      Ah yes, the clarification makes it better to understand. maybe when asking for help, dont lead with your own opinion first, give some options and leave it open. Preset opinion polls dont allow for insights from left field.

      Listening is an art (I know I fail on this many times), to which you can gain great insights or be bored to death.

      Orangetrain below has a more plausable reason, and solution.

      Maybe Broden is one of his other customers 😎 so they get cleaned out. Or maybe they need better online inventory control

      Good luck, I see you are already getting some good opinions further down😀

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  Soluble on 17/12/2019 - 07:02

  Sounds like the good guys concierge gift cards

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  orangetrain on 17/12/2019 - 09:09

  Sounds like classic drop shipping tactics to me, not temporary loans.

  Drop them and go with someone else.

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    phila63 on 19/12/2019 - 13:24

    My client tried to arrange a meeting with his supplier, but they wouldn't. So he is now looking to drop them

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  HighAndDry on 17/12/2019 - 09:50

  each time my client purchases the promo items, his order gets cancelled a week or two later due to no stock.

  Easily explained by the fact that promo and heavily discounted stock are likely to be in much higher demand and or already have low stock numbers.

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    phila63 on 19/12/2019 - 13:26

    Agreed, but to have nil stock and go through the refund process time and time again! That leads to dissatisfaction and my client has now dropped them.

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  KBZ on 17/12/2019 - 09:55

  Probably gaps in the inventory management system and their POS. Hence stock level is not "live" with POS when it syncs; orders don't get fulfilled and auto cancels after a certain period.

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    phila63 on 19/12/2019 - 13:26

    Probably but they have lost one client and I hear there are others none too pleased also.

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  Richfield on 19/12/2019 - 21:32

  Business needs cash injection to ensure it covers some debtors?

  Couldn’t they just collect the debtor?

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    phila63 on 20/12/2019 - 14:26

    No idea how the business operates but their practices pissed my client off and he dropped them as a supplier