When you buy supplies on account instead of paying cash there and then, your suppliers are your creditors until you pay them. Enter in your cash flow forecast the payments that you will make to your creditors (including VAT) in the months in which you will pay them. You might set up accounts with:
- outdoor footwear and clothing wholesalers and manufacturers
- specialist outdoor equipment wholesalers and manufacturers
- specialist repairers to whom you send outdoor equipment, clothing and footwear for repair
- suppliers of carrier bags and other packaging items, particularly if you sell online
The amount of different items that you are likely to stock may mean that you will use several different suppliers or you may be able to purchase all of your stock from only one or two specialist suppliers.
You might decide to join a buying group to benefit from better terms.
Setting up an account
For convenience - and to get the best terms of trade - it is best to set up accounts with your main suppliers. To do this you may be asked to provide bank and trade references. Until the account facility has been granted you will have to pay for your order at the time you place it. This is known as paying on a pro forma basis.
Once your account has been set up you will be invoiced at regular intervals and expected to pay within a certain number of days of receiving the invoice.
Discounts from suppliers
You may be offered, or be able to negotiate, various discounts from your suppliers. Examples include:
- early settlement discounts
- retrospective rebates
- volume discounts
Some suppliers may also offer items such as free display stands, help with promotions and so forth. These are likely to be related to the amount of business you put their way.
In some cases suppliers may impose minimum order conditions and charge you for delivery.
Depending on the focus of your outlet you might also buy stock from outdoor activity centres (second-hand equipment) or bankrupt stock, perhaps from an auction.