You might think running your company on a cash basis is a smart and savvy way to do business. You might be surprised to learn that there are many businesses that still sell goods COD. Specific industries especially sell their product COD requiring cash or wire transfer when they sell their goods. It’s a term of sale that has been around since the first camel hit the silk road.
To grow, most cash industries have learned to adapt and actually do both, sell COD and offer terms to buyers. The auto industry for example, sells cars for cash. The buyer might get time to pay, but that transaction is between the buyer and a finance company, the auto dealer actually gets paid the full purchase price from someone as you drive the car off the lot. Could you imagine if all cars were still sold for cash with no financing available? Auto sales would be a tenth of what they are today.
If you are demanding cash on delivery, you might be limiting your chances of expanding and growing your company. A buyer who has to pay$10,000, $20,000 even $100,000 for your goods, maybe able to double or triple their purchases if your terms were other than cash. Inflexibility to sell on 30, 60 or 90 day terms could actually have you leaving profits on the table.
Agreed, it’s not always possible for a business to sell on terms. A seller having to carry inventory and then waiting 30-90 days to get paid, requires a tremendous amount of capital, tying up cash you could use for expansion and growth. Your alternative to selling for cash would be to take on debt or put growth on hold to finance your sales. Neither are very palatable to a seller who is used to selling for cash and adverse to debt; not to mention the added cost of an accounts receivable department to handle billing and collection.
As with the auto industry, there are alternatives that sellers can use to offer both COD and terms to buyers and not take on debt. From retailers to the auto industry, financial institutions offer sellers, the ability to get cash on delivery and still offer terms to buyers. Financial institutions like AeroPay Express, MasterCard, Visa and American Express now provide accounts payable credit lines from $100,000 to $5 million dollar to buyers which they can access to pay sellers COD for goods purchased, while receiving terms on the sale from a financial institution.
Over the past decades these financial solutions have transformed the retail space along with the auto industry and they are now poised to transform every industry large and small. Where MasterCard, Visa and American Express put thousands of dollars of purchasing power in the hands of consumers to make small purchases from businesses, AeroPay Express, a new FinTech company, is putting the power of millions of dollars in the hands of business buyers to make large purchases from suppliers. Within five to ten years, the idea of a vendor selling goods on terms and waiting 30, 60 or 90 days to get paid, will be a thing of the past.
Just like a credit card, financial institutions such as AeroPay Express will be paying sellers for goods when they ship and take the risk of getting paid from buyers, freeing sellers up to do what they do best. If you want to stop being the banker for your customers, take a minute, give AeroPay Express a call and see how easy it is to have it both ways.