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> 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 inte
by jt2190 4y ago
> 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, including the costs of "financing" that USD 100 for 30 days.
Edit: I've known many people who started freelancing and who forgot to include all of their costs when calculating their rates, especially costs for things like repayment terms. This seems like a very easily overlooked problem for most new businesses.
- bombcar 4y agoBasically, yes. But many businesses don’t break it out as such (you can find by asking if they offer a discount for cash on delivery or even prepay).
- WastingMyTime89 4y agoI 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.