Day: April 25, 2014

Friday, 25 April 2014

12:00 – I just issued our first-ever response to an RFQ for someone who intends to buy our kits via purchase order. We’ve never sold on credit before, but I’m tired of turning down business. The exposure on this one isn’t huge, 30 chemistry kits ($5,220 worth) to a state 4-year college that has 20,000+ students. So I decided to offer them 30-day terms. I’ll do the same for other public and private institutions that appear credit-worthy. In other words, I won’t sell on credit to, say, the bankrupt Detroit public school system, but I’ll happily sell on 30-day terms to, say, Penn State University or Cal Tech.

We’ve sold a lot of kits to public and private high schools, community colleges, four-year colleges and universities, and various local, state, and federal government agencies, but always either via credit card or on a pro-forma invoice and pre-paid by check. The problem with that is that it’s a major hassle for the would-be buyers, who simply want to get their purchasing departments to buy the stuff. Many of them simply can’t do it other than by purchase order, so we end up missing out on hundreds of kit sales.

I’m fully aware that we’ll probably end up writing off a few bad debts or submitting them to a collection agency, but as long as I use reasonable judgment I don’t think that’ll be a major problem. When we started this business we had no credit history, but our two major wholesalers automatically granted us credit lines of $1,000 to $2,000 without any kind of formal credit application. At this point, I could probably issue a purchase order to either of them for $5,000 without anyone blinking an eye. They know we pay quickly. So, I figure if they can trust us, we can trust public universities and similar organizations.

Read the comments: 29 Comments
// ------------------------------------------------------------------------------- // end of file archive.php // -------------------------------------------------------------------------------