homepage Welcome to WebmasterWorld Guest from 54.237.184.242
register, free tools, login, search, pro membership, help, library, announcements, recent posts, open posts,
Become a Pro Member

Visit PubCon.com
Home / Forums Index / WebmasterWorld / Ecommerce
Forum Library, Charter, Moderators: buckworks

Ecommerce Forum

    
selling to school who won't prepay
fakeDecoy




msg:3654687
 6:19 pm on May 20, 2008 (gmt 0)

I run an online store selling widgets. A high school wants to make a $5000 purchase. It's district policy to only pay for goods once they're received. Is that common among public schools? So far I have only received prepaid orders, mostly small orders to individuals. So this is a new experience for me, and I'm nervous about getting paid.

I'm barely making ends meet and I can't afford a large loss. How safe would you consider this to be?

Shortly I'll also verify the legitimacy of this purchase by calling the main school phone number and speaking with the principal.

Any other ideas or advice you can offer?

Thank you!

[edited by: fakeDecoy at 6:25 pm (utc) on May 20, 2008]

[edited by: lorax at 10:55 pm (utc) on May 20, 2008]
[edit reason] widgetized [/edit]

 

piatkow




msg:3654776
 8:10 pm on May 20, 2008 (gmt 0)

Its certainly normal practice for local government on this side of the Atlantic. Over here (UK) I would expect a purchase order number which I could confirm with the education authority's accounts department.

bwnbwn




msg:3654790
 8:19 pm on May 20, 2008 (gmt 0)

I agree with piatkow there needs to be a PO issued from the schools office Faxed to you were you can verify the PO by a phone call.

Cienwen




msg:3654966
 12:28 am on May 21, 2008 (gmt 0)

I have dealt with schools in this same way and have not had problem. If you can get a PO, get one! Otherwise just make sure you have good recorded authorization for the purchase. Also, don't be surprised if they are a little late. The government is not in a hurry to pay you. ;)

jsinger




msg:3655077
 6:45 am on May 21, 2008 (gmt 0)

First, make darn sure it's a real school, not two Nigerians in a Lagos cafe. Is it in your country?

Yes, call the administration by going thru a listed phone number and not one offered by the buyer. We sell to a lot of private trade schools. Some do fail. And some aren't quick to pay bills.

Get a PO number to assure that the buyer was authorized to make such a large purchase. Believe me, their Accounts Payable Dept won't cut you a $5,000 check without a PO.

vincevincevince




msg:3655080
 7:01 am on May 21, 2008 (gmt 0)

I think you need to deal with the risk as it presents itself. Find out the cost of a business loan for $5k for a duration of six months. (E.g. total cost $6.5k). Tender the the $6.5k price, with a discount to $5k for payment within 15 days, discount to $5.5k for payment within 30 days, etc. to reflect your cost of borrowing money.

Make sure the terms are reproduced within the PO you receive and reject it if they are not. The PO is solid documentary evidence of what was agreed. Be wary of any 'clauses' on the PO which mean they need to get a certain person or body to inspect or accept goods (often taking months before this person visits).

Whether you actually borrow the money or not is not important - at least you will be in eventual receipt of sufficient funds to cover borrowing if you need to do so.

ytswy




msg:3655261
 1:36 pm on May 21, 2008 (gmt 0)

There are financial services [en.wikipedia.org] available which can help with cash flow against invoices received.

Apart from the cashflow issue of late payment there is also the issue of the extra work involved. One single $5000 invoice is obviously worth it in that sense, but if you start getting loads of $50 orders on purchase order you have a job of work to do keeping track of them, calling late payers etc.

We very very rarely accept purchase orders - costs us some business, but the market we are in means we can afford this for the benefit of keeping life simple and the money in our bank account where it belongs. If we did accept POs a lot of our cash buyers would probably take that option, so its swings and roundabouts. We're also in the UK where late payment on invoices seems to be pretty much endemic.

I do have to admit I rather enjoy telling someone who trys to use a PO for some cheap item how we work. "You pay us money, we send you products. In that order." ;)

For some organisations it seems to be more a paperwork thing than anything else, plenty of times I've offered to send a Proforma Invoice to someone who wants to buy on account so they can use this with their accounts dept to raise payment before the goods are shipped, and this is often accepted.

jsinger




msg:3655297
 2:06 pm on May 21, 2008 (gmt 0)

"You pay us money, we send you products. In that order." ;)

Jeesh!

Yes, and they say "you send us an impeccable audited credit report and proof youve been in business at least 10 years before we send you $5,000 in cash.

We're thrilled to take POs from most schools. Wish we had more. Theyre good repeat customers.

vincevincevince




msg:3655312
 2:22 pm on May 21, 2008 (gmt 0)

before we send you $5,000 in cash.

The time when banks wouldn't issue VISA or Mastercard to business customers are long long gone. Any large outfit should be able to obtain one and use it for purchasing.

ytswy




msg:3655313
 2:23 pm on May 21, 2008 (gmt 0)

heh, yeah it's not something I do regularly, and only when I think the customer is going to take the joke the right way :) ie NOT a school.

We sell high value low margin goods, the vast majority to small businesses/freelancers/individuals, so no account purchasing works well for us, but definitely not applicable to all businesses I realise.

jsinger




msg:3655363
 3:02 pm on May 21, 2008 (gmt 0)

The time when banks wouldn't issue VISA or Mastercard to business customers are long long gone. Any large outfit should be able to obtain one and use it for purchasing.

I have a "business" credit card that I use exclusively for business. Had it for many years. The bill goes to our office, not my home, and is paid by our bookkeeper. But it's really a personal card in that I'm personally liable for the debt if our corporation would fail. How easy is it to get a business card without personal liability these days? We're not a "large outfit."

Seems like every few months I hear of another misuse of government/military credit cards. Schools could also give out stacks of cash for purchasing purposes, but that wouldn't be smart. POs are usually binding contracts, sometimes requiring multiple signatures over a certain amount, that protect the seller too.

Bring 'em on!

CernyM




msg:3655683
 7:46 pm on May 21, 2008 (gmt 0)

The time when banks wouldn't issue VISA or Mastercard to business customers are long long gone. Any large outfit should be able to obtain one and use it for purchasing.

Government agencies very rarely will pay with a credit card, whether they "should" or not.

Purchase orders from schools are fairly low risk.

jecasc




msg:3655787
 9:18 pm on May 21, 2008 (gmt 0)

Usually orders from any governement institution including schools are low risk - in the sense that you will get your money. But not in the sense that you will get your money quickly.

If you make the deal make sure you a agree on a fixed term of payment in advance, perhaps offer a discount for quick payment and don't hesitate to send reminders if the payment is overdue.

piatkow




msg:3656140
 8:44 am on May 22, 2008 (gmt 0)

The time when banks wouldn't issue VISA or Mastercard to business customers are long long gone

I used to work for a major consultency and the corporate card would not have been accepted for a transaction of this size.

I am always happy to invoice local government departments but they can be slow to pay. The biggest risk is that the purchaser does not have authority for that amount of spend which could substantially delay payment.

Rugles




msg:3656649
 6:35 pm on May 22, 2008 (gmt 0)

Government agencies very rarely will pay with a credit card, whether they "should" or not.

We get orders every single day from government agencies in the USA and Canada. Almost all of them with a credit card. The US military issues credit cards to all their purhasing departments and at the unit level too. We have taken credit card orders from submarines under the ocean, aircaft carriers out to sea, from various war zones... etc. Plus many school boards too. We are noticing fewer and fewer PO's from government agencies.

But if they want use a PO, we always insist on a faxed PO, then we verify by the internet and/or a phone call.

[edited by: Rugles at 6:35 pm (utc) on May 22, 2008]

fakeDecoy




msg:3660986
 3:47 pm on May 28, 2008 (gmt 0)

Thank you for the replies! Everything checks out and they're now proceeding with the order.

Global Options:
 top home search open messages active posts  
 

Home / Forums Index / WebmasterWorld / Ecommerce
rss feed

All trademarks and copyrights held by respective owners. Member comments are owned by the poster.
Home ¦ Free Tools ¦ Terms of Service ¦ Privacy Policy ¦ Report Problem ¦ About ¦ Library ¦ Newsletter
WebmasterWorld is a Developer Shed Community owned by Jim Boykin.
© Webmaster World 1996-2014 all rights reserved