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Many store owners struggle to manage cash flow, especially as it relates to getting vendor terms on future orders. A great question in our retail community came from a clothing and accessories store owner who said: “I have to place a lot of my orders six to eight months in advance. This ties up so much money and oftentimes I’m left scrambling to pay for it.”
Handling vendor terms
Placing orders is not the same as paying for inventory upfront. You should never be in a situation where you’re paying for inventory that hasn’t arrived in your store yet. You should have vendor terms on advance orders."You should never be in a situation where you’re paying for inventory that hasn’t arrived in your store yet. You should have vendor terms on advance orders."
Managing cash flow
Effective cash flow management is the lifeblood of any retail business. If you’re struggling with cash flow issues, focusing on improving your vendor terms over the next year can make a big difference. Negotiating better terms can free up cash and give you more flexibility in managing your inventory and finances effectively.A note about credit cards
Relying on credit cards to compensate for lack of terms with vendors is generally a bad idea. If you can’t guarantee that you’ll have the funds to pay the balance before the due date, you’ll end up paying steep interest.Cathy Donovan Wagner guides retailers to grow their sales so they can pay themselves and their staff. Watch how here: www.retailmavens.com/increasesales.