Lawrence Sports

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...