Volume 41, Issue 11 - November 2006


Payment Options
There are More Ways to Pay than You May Think
by Paul Bieber

As a glass business owner, your biggest expense is labor; you have to make these payments weekly. The metal suppliers generally have tougher terms than glass suppliers, and there are fewer of them, so you canít easily bounce from one metal supplier to the other. That leaves your glass suppliers, at best, as number-three on your payment list.

Ways to Pay
Most glass suppliers prefer a good customer who is an open account rather than a customer who is a collect on demand (COD) account. While payments are more assured from a COD account, the extra work in handling these accounts is burdensome, especially with problems such as on-truck breakage, missing lites, someone forgetting to leave a check and the paper flow can be a quagmire. Similarly, very few glass shops prefer COD. If you are a COD account and want to earn and have the ease of an open account, here is an easy way to get there: give your glass vendor $2,000 and have him subtract from your balance with each order. When your amount runs down, refill the account with another $2,000. Do this five or six times and (depending on the company with which you are working) you could earn an open account for a couple of grand. If you pay your balance every month, in three more months you could have a $5,000 credit limit and you could keep going from there. 

Look for a Discount
When you have an open account, the single best business decision you can make is to pay your bills within the discount period. If a vendor doesnít give a 1- or 2-percent cash discount for ten-day payments, shop around.

If you are doing $5,000 a month, paying in ten days and putting your savings into a 5-percent savings account, you would have earned $630 in your savings account from a fabricator with a 1-percent discount and $1,260 from a supplier with a 2-percent discount. If you pay your bills in 60 days, not taking your discount, but putting your owed amount into that same savings account for 60 days, you would have $458. You are 37 percent ahead from a 1-percent vendor, and 175 percent ahead from a 2-percent vendor. Now, I have never bought a loaf of bread with a percentage, but you are either $172 or $802 ahead by taking the discount. Not bad.

Here is the kicker: If you pay your bills in ten days, you will get better glass prices and better service. You canít measure this, but it is the biggest benefit of all.

And Airline Miles to Boot
Sure, everyone has the money to do this. What? You donít? Hereís a sure-fire plan. Most large credit card companies let you pick your payment date. Letís pick the 28th of the month for your statement. Pick a credit card that does not charge interest on the purchases until after the first statement, and you tell your glass vendor to put a charge for your whole balance through on the 29th of each month. Then you pay the credit card company on the 26th of the next month and you have your 30 days of free money. Your vendor may or may not give you a discount with credit card payment, but they will be very happy with you and your guaranteed payment. By the way, you also earn enough airline miles for four flights. Who was the last vendor that paid for your vacation? I just got off the phone with three different Visa and two different MasterCard banks and they all offer credit cards that meet these terms. Do it now Ö you will come out ahead.

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No reproduction of any type without expressed written permission.