Purchasing Stock Abroad
Looking to break away from the competition and improve your business’ cash flow? Provident Inventory Finance’s Matthew Nolan offers some useful tips for purchasing stock abroad….
Like many small to medium enterprises, hardware businesses can have a difficult time creating a point of difference from their competitors where stock and prices are concerned. Purchasing stock abroad, however, can help hardware businesses expand their products lines while in the process give access to stock at cheaper prices. It can also help increase a business’ working cashflow. If you haven’t considered buying stock from abroad, 2007 might just be the year to start diversifying your purchasing practices. Here are some hints and financing suggestions to get you started
Do your Homework – Finding a new, good quality supplier can be a challenge, and it’s no different when trading overseas. A new supplier will need to be competitively priced and reliable, so be sure to use as many resources as possible, such as the internet, to check their background, product range and delivery history. Compare the results of your research with your business plans and objectives. If they match up, start to approach suppliers and get a personal measure of their systems, processes and credibility.
Communicate with your Suppliers – If you’re going to maintain your cash flow and increase your business’ potential, you need to be sure stock arrives on time to the correct specifications. Be honest and open with your suppliers through outlining your needs and expectations in a written contract, and don’t be afraid to ask for guarantees. This will also help ensure that you’re not caught by surprise on hidden costs, or unexpected delays with freight scheduling.
Pay Upfront – Some suppliers will offer discounts or add incentives for upfront payments, and this could certainly lower your costs. Keep in mind though, that using your existing cash for upfront payments can cripple your cash flow, especially if you have to wait until cash is recouped from the sale of stock. To overcome this problem, hardware retailers are increasingly turning to lending options such as inventory finance to bolster their cashflow needs. Businesses can finance their supplier invoice amounts up front and in-full through inventory finance, making repayments to match the sale of the goods. This can be a useful tool since it allows businesses to make the most of their working capital, as well as benefit from cheaper prices having paid upfront.
Transport and Taxes – Importing can carry extra costs, so ask your supplier if the logistical aspects of your stock’s delivery are included. If they aren’t, it definitely pays to have a good customs agent who can clear your goods quickly and ensure that you are not paying too much freight and tax.
Have a Back Up Plan – Even if you have a sound relationship with your supplier, things sometimes go wrong. So remember to include a contingency plan, such as keeping some emergency stock on hand or access to an alternative supplier, to allow your business to cope with shipping delays or other mix-ups. As with any business activity, importing stock does come with some risks, but with solid logistical and financial planning you might be able to inject the added difference that puts your business above the competition.
If you’d like more information on inventory finance or financing your business growth visit www.inventoryfinance.com.au or call 1800 763 012.