Terms Discounts vs. Extended Terms

Occasionally a supplier will provide you with an “incentive” for paying an invoice before its due date. These are often referred to as “terms discounts.” A common terms discount is “2% 10 Days Net 30 Days.” This means that while the...

Do You Have an Early Warning System?

Most computer systems provide buyers with out-of-stock reports. These are listings of stocked products with no available inventory. Because the stock-out sales orders cannot be filled, salespeople cannot provide the service their customers expect. Buyers scramble to...

There’s No Such Thing as Free Inventory

A few weeks ago a Canadian distributor emailed me with a very interesting situation: “The vendor of one of our seasonal product lines has an interesting program to encourage us to stock a lot of their products. At the end of the popular season, they give us a...

When the Price Goes Down, How Much Do You Buy?

Sometimes the cost of an item will be dependent on how much is purchased. For example, Foyt’s Racing Supplies offers the following discount schedule for the #AJ 3000 Brake Pads:   Quantity Unit Cost Discount Net Unit Cost 100 10.00 5% 9.50 500 10.00 7.5% 9.25...

How Much Is Free Freight Worth?

Many vendors offer to pay freight charges if an order exceeds a certain minimum requirement. Many buyers are “brainwashed” into thinking that they must always place an order that meets the free-freight minimum, even if it means bringing more inventory than...