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Wholesale - Risky


#1

Hello friends, Recently, at a show, a gallery owner asked to buy some
of my lower end pieces to sell in her gallery. We agreed I would
keep them for the show and duplicate any that sold to send on to
her. I am now ready to send the pieces to her and am not sure how
to handle the financial end. Do I send them without any kind of a
contract and trust her to send a check upon receipt? That sounds
risky even though we are not talking big bucks. I don’t want to
offend her by implying I don’t trust her to pay me. How do you
tactfully handle this kind of a situation?

Input much appreicated.
Thanks, Grace


#2

Grace, Make this your business policy today!..Call her and tell
her" Your order is finished just the way you wanted, packed for
shipping and awaiting your payment in full." However you wanty it
credit card, check cash is up to you. If shipping charges are a
question for you, simply state that shipping charges will be billed
seperately. I have been in those shaky shoes before and have learned
that it’s simply business…standard policy and expected! Go for it!
Mary Ann Archer


#3

Tom and Grace: It is not unusual to ship and order COD where there
is not an established relationship with the buyer or where they do
not have an open account with your company. Simply call the owner,
tell her the order is ready and you wish to confirm the address, &the
order before shipping and to let her know the final invoice price and
that you will be shipping COD. I usually work with a 50% down and 50%
on delivey on special orders anyway. Frank Goss.


#4

Hi Grace,

Do I send them without any kind of a contract and trust her to send
a check upon receipt? 

If you use any kind of a preprinted sales book/receipt, there’s
usually a row of boxes near the top. One of the boxes is marked
"CHARGE". Just put a check mark in it & complete the ticket as usual.

Another way is to include a typed/handwritten invoice describing the
merchandise, the cost & the terms.

Dave


#5
Do I send them without any kind of a contract and trust her to
send a check upon receipt? 

No! Call her and say you’re ready to ship and will be sending the
pieces COD (cash or money order only, unless you’re willing to risk
getting a bad check) unless she would rather send you a check or
charge to a credit card in advance (pre-payment is commonly called
"pro forma"). Chances are she won’t even question this. If she
does, you can explain that this is how you always do first orders and
that you’ll be happy to work out a net 30 payment arrangement for
future orders. If she objects, say that as a businesswoman you know
she’ll understand that you have to be careful and politely refuse to
ship without pre-payment or a COD arrangement. The only other
acceptable alternative is to ask her for a list of references of
other artists that she does business with. Then get on the phone
with them and ask every pertinent question you can think of.

These are common business practices and if she really balks, that in
itself should tell you something! Hope this helps. Beth


#6

Hi Grace,

I have a business that is now almost only wholesale. My rules are as
follows:

  1. First orders are ALWAYS C.O.D., (cash on delivery) or Pro-Forma,
    (they send you a check up front, you wait until the check clears, and
    then you send the work), unless the store buying my work is a
    non-profit or a museum. Those stores have a complex payment set up,
    and in those cases, I accept net thirty with references.

  2. Subsequent orders can be given net-thirty…that is, the store is
    allowed to pay for the product in thirty days, if I am sent a list of
    credit references. I require three references, some people require
    five references.

  3. Check those references thoroughly…you might find out all kinds
    of interesting things. One client uses me regularly as a reference.
    When their prospective seller calls, I tell them that the client is a
    lovely woman, who never ever pays on time, but she alway pays…
    within two and a half months. For some, that is acceptable, others
    wouldn’t consider her for credit. If their credit isn’t to your
    liking, then keep them on C.O.D. or Pro-Forma.

  4. ALWAYS call the buyer before shipping C.O.D. orders. Even if you
    think that they are expecting it. Not only is it polite, you can
    confirm the order at that time, add or subtract from that order, and
    confirm that the buyer is prepared to pay for the order.

  5. Be strict and consistant with your requirements. Same rules apply
    for everybody. Its easier to keep track that way. I give out a
    "Policy Sheet" to every new customer, that spells out what they can
    expect from me, and what I expect from them. I’ve copied it
    below…if it is too long for Hanuman, you can write me off list for
    a copy. I find that this clears up almost all questions. Feel free to
    plagerize, if you think it might help.

Good Luck,

Lisa, (Junkos and Warblers have appeared on the bird feeders…fall
must be here), Topanga, CA USA

Policies:

Thank you for placing your order with me. The list of policies
below, is to clarify any questions that you might have concerning
your order, and how it will be handled once it is placed, and after
it has been received. If, after reading this, you have any further
questions or comments, please contact me, and I will do my best to
respond ASAP.

Purchase Orders: Orders will be placed on my forms, confirmed, and
signed by the purchaser at the time of purchase. Changes to the
purchase order can be made up until 2 weeks prior to the ship date.
After that, orders for which casting or fabricating have already been
completed, will be assessed a 20% restocking fee, to compensate for
any expenditures already made to fill that order. If specific casting
or fabricating was not necessary for this order, no fee will be
assessed. Altering the final ship date, will accrue no fees unless
one of a kind items are involved. Please see =93One of a Kind=94 below=
,
for further explaination.

Cancellations: Orders may be cancelled in their entirety, up until 2
weeks prior to the ship date. Orders cancelled after that time will
be assessed a 20% restocking fee. No exceptions.

Shipping: Buyer will pay all shipping costs, including insurance,
but will not be charged for packing costs. Please note: Neither UPS,
nor Fed Ex will insure jewelry, precious metals, artworks or
gemstones for over $500. EVEN IF YOU PAY THEM FOR THE INSURANCE, AND
THEY TAKE YOUR MONEY TO INSURE IT. Rider insurance must be purchased
to compensate. Because of this, I prefer to ship your order either 3
Day Priority US Mail, or Registered Insured US Mail. Those methods
are very safe, and also less expensive to the buyer. All Orders will
be shipped with insurance, and some method of tracking the order.

CODS: All CODS Will be shipped via FED EX, with rider insurance.
Since Fed Ex is slightly more expensive than UPS, I will absorb the
cost difference between UPS and Fed EX. Please make COD checks out to
Byzantia, not to the shipper on the shipping form or box. Except for
Museums and Non Profit organizations, all first orders will be
shipped COD or Pro Forma. Due to the exorbitant COD shipping costs, I
prefer to ship Pro Forma for first orders, but will ship COD at the
buyer=92s request. I will always call the Buyer, prior to shipping any
COD order. Because I will never ship a COD order without your prior
approval, buyer will be charged for full shipping costs plus a 20%
restocking fee for a =93refused=94 COD.

Late Shipments: Occasionally there are situations beyond my control.
I will make every effort to get you your order on time, or to notify
you if there is a delay. Orders that pass their ship date may of
course be cancelled at any time. If you do not cancel the order, when
contacted, I will assume that you still want the order, and will ship
it when it is ready, or at a later ship date that you specify.

Invoicing: Unless otherwise requested, invoices will be shipped with
your order. Alternate invoicing requests should be specified at the
time of purchase. All first orders will be Pro Forma or COD, unless
you are a museum, or a non-profit organization. If you will provide
me with 3 or more verifiable references after the first order is
completed, I will provide you with a net-30 payment arrangement,

Payments: All company check, cashiers check, or money order payments
should be made out to =93Byzantia. I do not accept credit cards at thi=
s
time. Please do not postdate checks without approval. Please mail
payments 30 days from the ship date, not 30 days from receipt of the
order, to allow for mail delays.

Late payments: Excessive late payments, unless previously ok=92d by
me, will return the buyer to a Pro Forma/COD only status. If you need
to be late, please fax me a note, e-mail, or call.

One of a Kinds: One of a kind pieces will be set aside, removed from
the display case, and protected with your store=92s name placed on the=
m
at the time of your order. They will not be copied or resold unless
previously indicated to you prior to sale. One of a kind pieces can
be either shipped, or taken by you at the show to save shipping
costs. One of a kind items must be either shipped or paid for within
3 months of the purchase order being made, unless the items are being
fabricated at a later date, specifically to fill that order.

Returns: No returns. Exchanges only, with proper documentation. See
=93exchanges=94 below.

Exchanges: Please enclose a copy of the invoice that the work came
from, in order to verify the date of original purchase. I will
exchange undamaged jewelry after you have had it for a period not
less than three months, and within a one year period. I will not
exchange jewelry that has been in a store=92s posession for more than
one year. I will not exchange exchanges. Orders must be paid for in
full, prior to any exchanges made. There can be no exchanges made on
special orders

Repairs: I guarantee all of my work for a one year period, and will
repair any problems related to my workmanship, free of charge, and
will pay all shipping costs related to workmanship repairs. Any
repairs that are not related to my workmanship, i.e: customer/store
damage/natural disasters…including children/accidents, or after the
one year period has passed, (see, =93exchanges=94 above), will be
assessed the cost of materials, plus a nominal fee for the time spent
repairing the work, plus shipping costs. I will determine if the
repair is related to workmanship, and will notify you prior to
incurring any repair costs.

Thank you for your business!

Lisa Bialac-Jehle
BYZANTIA


#7

Dear Grace…You are in business. It is not only perfectly
reasonable to call and talk with your client before you send your
jewelry out, but prudent. There are two ways you can handle it, that
I see:

  1. Ask her to pre-pay the order. It is a small amount she can send
    you a check and you can send the merchandise when the check clears.
    Or she pay you with a credit card. I am always cautious of COD
    because I have had checks bounce once the client gets the
    merchandise.

  2. If you are comfortable giving her net 15 or 30, ask her for a
    list of “jewelry designers” she has worked with in the past as
    credit references with names, telephone numbers and addresses. And
    call them.

If the client hesitates about either, I would hold on to the order.
Anyone who is at all professional expects to pay within the terms of
the seller, unless you both agree to special arrangement. I feel
that you never want to send merchandise off if you don’t really know
who you are dealing with. You are wise to be cautious.

Marlene Richey
MRichey Consulting
207.772.5252
richeydes@aol.com


#8

Lisa, You are obviously a very organized and together wholesaler.
Your policy sheet is well put together and exceedingly clear, however
Fed Ex IS now offering coverage on jewelry if you sign an agreement
with them. You can get the agreement from your Fed Ex representative
(not by just calling their number). The agreement is designed
specifically to deal with gems and jewelry and allows you to insure
up to at least $25,000 (I can’t remember the exact amount off hand).
It is less expensive to use than jewelers block coverage that insures
shipping. Obviously some restrictions apply (no shipping over
weekends, must be shipped overnight, etc.) but it is still, im my
humble opinion, the best insured shipping option available right
now.

Daniel R. Spirer, GG
Spirer Somes Jewelers
1794 Massachusetts Ave
Cambridge, MA 02140
617-491-6000
@spirersomes
www.spirersomes.com


#9

Yahoo… Thanks Dan. I read about Fed Ex’s new policy after I posted
my wholesale policies. About time I think. I was getting pretty tired
of rider insurance and US mail…Oh…In case anyone was wondering
whiy I emphasized Fed Ex over UPS: UPS keeps the dang COD money for a
few weeks before sending it to you. Fed Ex sends the payment back
within a few days.

Lisa,(water pipes blew this morning, spent today on the mountain
replacing 14’ of 1" galvanized…In the dark…yuck), Topanga, CA USA


#10

All, Yes, all these inputs about credit are great. But, what do you
do when you have established an agreement, signed a form, delivered
the product, and do not get paid? Do you sue, ask for return of the
product, further extend terms? At one time we had over $50,000 in
credit past 180 days due. These were delivered and often sold items
that the buyer refused to pay for until they were good and ready.
Can you still operate with that much capital overdue and your bills
arriving on time? Our motto is you pay we ship. We no longer
manufacture. We sell a product. I have been there and nearly lost
my business to unpaid accounts. Looming bankruptcy when you have
$50,000 in accounts receivable is quite an eye opener. No more.

Gerry Galarneau
@Gerry
www.galarneausgems.com


#11

I couldn’t agree more with Gerry – and this stands true for all
businesses. Accounts receivable is one of the places where most
businesses lose money hand over fist. There is a principle in
business called “cost of capital” or “cost of money” that basically
takes into account the fact that $1 today is worth more than $1 180
days from now, due to inflation and lost opportunity. So the more
you can reduce the amount of time before you receive your payment,
the more actual money you have to operate your business.

There are a couple of ways to handle this. One is, as Gerry has
chosen, to demand payment in advance of shipment. Others ship “Net
30” (i.e., you ship, and they agree to pay within 30 days). If they
don’t pay according to the agreed-upon schedule then you CAN (note,
I’m not saying “should”) do any of the following:

  • Begin to dunn them (call them and negotiate payment), and feel
    free to add “overdue” charges to their account (be sure this is
    stipulated in your initial contract with them, to make it ironclad –
    just like the credit cards do) * Choose not to do business with them
    in the future * Hire a collection agency to get payment from them
    (which also should show up on their credit reports) * Go to small
    claims court (or another venue depending on the size of loss) to try
    and recover your losses * Report them to the Better Business Bureau
    in their area

Having said that, this is a very hardline approach, and one that
costs you money to pursue. Make sure BEFORE you enter into any
agreements that you have:

  • Checked their credit references / history * Checked with their
    Better Business Bureau and any state bureaus of enforcement that may
    be applicable (a lot of this can be done online for a small fee) * If
    they are a decent size (more than a couple of employees), check
    their Dun & Bradstreet report (D&B report), which you can do online
    – this provides you with decent financial and a warm,
    fuzzy about their stability * Written and negotiated a sound,
    comprehensive agreement of sale or consignment (there have been some
    good ones passed around here - check the archives) that INCLUDES
    REMEDIES FOR NON-PAYMENT … i.e., what you will do and in what order
    if they don’t pay. That way, they can’t go to court and say “But,
    Judge, we never agreed to pay her within any specific time…”

Just some food for thought…

Karen Goeller
@Karen_Goeller


#12

Are there any collection agencies which specialize in helping
jewelers and lapidaries with their aged receivables? I think that
one of the big hurdles for metalsmiths and lapidaries who want to
work for themselves rather than working for the man is that they
find themselves having to become overnight collectors, financial
managers, marketing experts, web designers and purchasing agents. It
would be a rare individual who is truly competent in all of these
areas in addition to being an artist. Seems like there is a need for
niche businesses providing such services to independent jewelers,
lapidaries, etc, so the respective artists could focus on doing what
they love and are good at.

Lee Einer