Setting The SceneThis is the office of a grain merchants. The merchant buys grain from farmers to sell to the flour mills, but also sells seed grain to the farmers so they can grow their next crop.
That day in the office there was the boss and the new young enthusiastic grain trader.
The Telephone EnquiryThe young salesman answered the phone, it was a potential new customer asking for a price for 10 tonnes of seed. The trader quoted a price, to which the farmer immediately said "Yes, that price is OK, I'll take delivery as soon as you can get the seed to me".
The young trader enthusiastically took the farmer's details, arranged delivery for the following week and explained the 30 days payment terms. That was the end of the telephone call.
The BossThe boss looked over his glasses and puffed on his cigar (this was before the days of no-smoking offices).
"Ye wain't get paid lad!" exclaimed the old Yorkshireman from behind his big leather topped desk.
How did the boss know this? He went on to explain...
"If they're (the farmers) spending their own brass, they'll always haggle for a discount. Yer new man hasn't any intention of paying, that's why he agreed to yer price. Mark me words, ye wain't get paid".
The OutcomeSure enough, the grain merchant never got paid.
The TakeawaySome industries still work on credit terms with monthly invoicing. If your business operates in this environment then make sure you know your customers, or ask for references and follow them up.We all want to receive the full price for our goods and services, but always beware.
If something is too good to be true, then normally it is too good to be true. This maybe wasn't the case in this example, but it's a good rule to follow whether you are selling or buying.
Not certain about something? Ask your manager for their opinion. They have years of experience and could have experienced the same situation before.
Get the money firstMost online businesses will take payment before despatching the goods. This is the safest method for any business. However, it will depend what industry you serve and what goods you sell as to what is the normal payment procedure.
There certainly seems some sense in a new business structuring itself and its products to take payment first.