Fundamentals
The Simplest Advantage of purchasing in Cash is the limitation on what you buy. You will purchase only products that are essential and in limited quantity that can be covered by the cash you have on hand. Purchasing with cash also helps to curb impulse purchasing habits.
Benefits of Cash Purchase
- Suppliers will provide the Best Price(Most Economical)
- Suppliers will offer the Latest Goods ( Fast Moving )
- Suppliers will provide Preferred Buyer status in informing of the latest goods arrival.
- Prudent
Buying ( Purchase goods that are most required and in minimum quantity as per cash available)
- No Supplier following up with us for payments
Challenges of Cash Purchase
- Limited Purchasing, which is a blessing in disguise
- Suppliers following up for sales orders, a chance to build good relationships and get more market information
Benefits of Credit Purchase
- Free will to purchase products without any limitation to the quantity
Challenges of Credit Purchase
- Manufacturer or Supplier’s create a Warehouse in your premised by Shipping Extra Goods than ordered
- Suppliers not willing to sell fast-moving goods
- Suppliers increase the prices of the products gradually
- Overtime the Supplier Payment increases to a limit, where only after payment of previous due bill will offer new goods.
- Dead Stocks keeps increasing
- Not able to concentrate on Business due to constant Supplier follow-up for payments
Real-Life Experience
Suppliers with the intend of locking their customers act in a very friendly manner to offer goods with extended payment terms. Over time they keep sending more goods than ordered and also a subtle increase in price and then start the emotional blackmail of how much favor they have done on us and pressure us to pay.
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