Lawrence Sports
- Submitted by: viracg
- Views: 1165
- Category: Other
- Date Submitted: 04/05/2010 02:54 AM
- Pages: 2
- Report this Essay
Alternative #1
Negotiate better terms with vendors. Recommend a net 60 days. This would allow Lawrence sport to collect on their own Net 30 day’s term from customers. Typically, most vendors pay after the term comes due. So on a net 30 days one can expect payment at the 43-day mark. Upon collection from Mayo (the client), Lawrence can turn around and pay its suppliers (Gartner and Murray) within the 60 term.
Alternative #2
Negotiate better terms with customers. Lawrence should ask for a down payment on all orders. They could ask for 20% down prior to shipment, 20% upon Receipt, and Net 30 days for the final 60%. This would guarantee a 40% payment upfront for their sale. It is double of what they currently collect. By allowing a 30 day net on the remaining 60%, it eases the cash crunch for the client. So you raise the up front fee by 50% but at the same time you ease off on the remaining 60%. As a client these are much better terms that 20% up front and 80% in one week. That means that they are literally paying the whole amount in a few days. These new terms should earn Lawrence brownie points with the client.
Alternative #3
Back to suppliers, another alternative, (that I use) is to negotiate smaller weekly/biweekly payments on invoices. For example, instead of paying an invoice in full in 30 days, negotiate payments to begin on day 30. (i.e. Invoice = $50,000 divide by 5 weekly payments of $10,000). This would have to be negotiated on an invoice to invoice basis. Also, what this creates is a win win situation for supplier and client. The supplier is not made to extend out their due date and thus create a possible cash crunch for the supplier. In addition, as the customer, we can manage our budget with shorter payments rather than fork out a big chunk at one time.
In my experience I have used all of the above alternatives. I have used Alternative 1 and 3 for my vendors/suppliers. This has been very beneficial when my...
Negotiate better terms with vendors. Recommend a net 60 days. This would allow Lawrence sport to collect on their own Net 30 day’s term from customers. Typically, most vendors pay after the term comes due. So on a net 30 days one can expect payment at the 43-day mark. Upon collection from Mayo (the client), Lawrence can turn around and pay its suppliers (Gartner and Murray) within the 60 term.
Alternative #2
Negotiate better terms with customers. Lawrence should ask for a down payment on all orders. They could ask for 20% down prior to shipment, 20% upon Receipt, and Net 30 days for the final 60%. This would guarantee a 40% payment upfront for their sale. It is double of what they currently collect. By allowing a 30 day net on the remaining 60%, it eases the cash crunch for the client. So you raise the up front fee by 50% but at the same time you ease off on the remaining 60%. As a client these are much better terms that 20% up front and 80% in one week. That means that they are literally paying the whole amount in a few days. These new terms should earn Lawrence brownie points with the client.
Alternative #3
Back to suppliers, another alternative, (that I use) is to negotiate smaller weekly/biweekly payments on invoices. For example, instead of paying an invoice in full in 30 days, negotiate payments to begin on day 30. (i.e. Invoice = $50,000 divide by 5 weekly payments of $10,000). This would have to be negotiated on an invoice to invoice basis. Also, what this creates is a win win situation for supplier and client. The supplier is not made to extend out their due date and thus create a possible cash crunch for the supplier. In addition, as the customer, we can manage our budget with shorter payments rather than fork out a big chunk at one time.
In my experience I have used all of the above alternatives. I have used Alternative 1 and 3 for my vendors/suppliers. This has been very beneficial when my...