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A Question for Retailers


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Looking for help in determining how many Retailers are Limited Companies, Partnerships. Sole Traders etc. Reason? I have been informed that one major manufacturer determines Credit Limits by applying lower limits depending on status. Not on ability to pay or payment history. Would really appreciate your help with this. We have discoverd that our credit varies hugely with different companies and has certainly come at the wrong time of the year for us.

 

By all means PM me or send email to [email protected]

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Surely the best person to ask is your accountant. Otherwise the conflicting advice you`ll get from other sources will leave you no better off. Other sources can be any form of social media 

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  • RMweb Gold

I manage a SME wholesaler to small retailers and we see a roughly 50/50 split in registrations for small bricks and mortar for ltd vs sole trader. Partnerships are rarely seen.

 

I make decisions based on trading history,  by which I mean frequency, volume and how easy you are to deal with. (Sadly) History shows If customers are a pain to collect proforma payments from, and make lots of alterations(changes and removals/returns) to orders in the early days, they are likely to be a hassle to collect payments from in the longer term simply because they are likely to be disorganised, even without the roller coaster that retail can be.

 

where ltd vs sole trader can make a big difference is if the supplier is using credit insurance/factors to underwrite debtors (with or without your knowledge, beyond the pages of t&c’s many use, as a customer) as the insurer will be calling the shots.

 

The other thing that can help is simply picking up the phone and talking through your requirements with the credit controller in advance(or in advance of them calling you in the case of an unexpected issue, such as recent changes to water billing that have thrown some retailers cash flow out). If they understand your requirements they can help work through them.

Edited by Jonboy
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7 minutes ago, Jonboy said:

 

 

where ltd vs sole trader can make a big difference is if the supplier is using credit insurance/factors to underwrite debtors (with or without your knowledge, beyond the pages of t&c’s many use, as a customer) as the insurer will be calling the shots.

 

That could be the issue we are having. The company concered won't/can't carry out credit checks on ourselves as we are not Limited. I suggested that credit checks be carried out on us as an individuals. Not possible was the reply.

7 minutes ago, Jonboy said:

 

The other thing that can help is simply picking up the phone and talking through your requirements with the credit controller in advance(or in advance of them calling you in the case of an unexpected issue, such as recent changes to water billing that have thrown some retailers cash flow out). If they understand your requirements they can help work through them.

 

We have been paying this company for nine years and have never missed an Early Settlement Date, let alone paid late or missed payments. Despite our payment history we have found out that our credit limit has been gradually lowered. Not helping the company if they have low credit limits for anyone who is not limited. Hence my question if this applies across the industry.

 

I approached them to be told that they couldn't increase our credit limit as we were not a Limited Company. We only found out how low our credit limit was when we were waiting for items to be delivered. Up to our credit limit we were told. I had to ask them, no approach was made from their accounts dept. I just paid early, but goods were delayed and we still haven't received what we needed for the Christmas period.

 

Outcome realistically is reduced sales for the company and us.

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The company may well sell on the invoice/credit to a factoring company and its the factoring company's conditions.

 

Credit is based on a number of factors, limiting the retailers owners liabilities to debts by setting up a limited company can affect a companies borrowings unless personal guaranties are given. I would assume more of a blanket ruling rather than an information based assumption  

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Why would an accountant know the details of confidential internal policy’s and procedures of a particular model railway supplier? 

 

They will likely be able to advise typical possibilities but won’t Typically have any direct contact with the suppliers.

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1 hour ago, 40F said:

Not sure my accountant would know.

 

I would change my accountant as soon as possible. They ought to know

 

Not sure you have the right angle on this.

 

We bought our Business truck from Nissan. If he doesn't know how Nissan's Credit Facilites and decisons are arrived at I should get another Accountant?

 

Bit harsh, especially as he has a family to support and it is Christmas.

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4 hours ago, hayfield said:

The company may well sell on the invoice/credit to a factoring company and its the factoring company's conditions.

 

Credit is based on a number of factors, limiting the retailers owners liabilities to debts by setting up a limited company can affect a companies borrowings unless personal guaranties are given. I would assume more of a blanket ruling rather than an information based assumption  

 

I don't think Factoring is involed in this situation, although plenty of other companies we deal with have used/still use that facility.

 

As a update, the company concerned have very recently issued a Credit Note for some damaged goods we had to return. As of today, they now owe us.

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5 hours ago, Widnes Model Centre said:

We have been paying this company for nine years and have never missed an Early Settlement Date, let alone paid late or missed payments. Despite our payment history we have found out that our credit limit has been gradually lowered. Not helping the company if they have low credit limits for anyone who is not limited. Hence my question if this applies across the industry.

 

This sounds like either the company, or an insurer they are using, getting more cautious given an uncertain business environment over the last number of years.

 

5 hours ago, Widnes Model Centre said:

I approached them to be told that they couldn't increase our credit limit as we were not a Limited Company. We only found out how low our credit limit was when we were waiting for items to be delivered. Up to our credit limit we were told. I had to ask them, no approach was made from their accounts dept. I just paid early, but goods were delayed and we still haven't received what we needed for the Christmas period.

 

If they are not taking into consideration your payment history, and a knowledge of you as a customer (because really the model railway retail business is small in the grand scheme of things) it definitely sounds like they are using a 3rd party that is setting the rules.

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13 hours ago, Widnes Model Centre said:

 

I don't think Factoring is involed in this situation, although plenty of other companies we deal with have used/still use that facility.

 

As a update, the company concerned have very recently issued a Credit Note for some damaged goods we had to return. As of today, they now owe us.

 

 

How about a friendly chat with the rep, the sales departments quite often are very protective of their customers

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14 hours ago, Widnes Model Centre said:

 

Not sure you have the right angle on this.

 

We bought our Business truck from Nissan. If he doesn't know how Nissan's Credit Facilites and decisons are arrived at I should get another Accountant?

 

Bit harsh, especially as he has a family to support and it is Christmas.

 

I can`t see your point. Your OP did not mention anything about trucks

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24 minutes ago, Colin_McLeod said:

If being a limited company makes credit easier, then surely the solution is to become a limited company.

 

 

I can see your point Colin.

 

When we were starting out as a Model Shop, there were decisions to make as to set up, cost, borrowing from Banks etc. Becoming a Limited Company has costs involved.

 

Borrowing from a Bank in 2010, impossible, no matter what our status was. They were just not lending. We went with using our own money. We knew that we would never seek to get out of any finacial trouble by partly hiding behind LC status. It was for us an uneccesary expense. We are still unable to take on any form of borrowing due to our ages without the borrowing being "secured". Not on the business but on our house. We haven't gone down that route.

 

We all know Limited Companies who have walked away from their responsibilites this year. We won't have debts on our conscience, unlike some as you well know.

 

This is the one company that we have a low credit limit with. The credit limit we have with a similar company is £30,000.

 

Our current stock level is approximaely £250,000. As of this morning, we owe slightly less than £4,000. None of that debt is due just now.

 

A bit off topic, but may show you some of the difficulties that lie ahead possibly at the end of January 2020. Part of the £4,000 we owe is to a company based in Scandinavia. It is actually £600 ish. Our bank is making it very difficult for us to pay this amount. It is a newly formed company that is part of one of the biggest toy manufacturers/exporters/retailers certainly in Europe. As they have no Credit History as the newly formed company, the Bank believes it may be trying to obtain money from us. They are, we already have the goods !! The company is opening a Bank Account in the UK to get around this problem. But that isn't as easy for them as it used to.

Edited by Widnes Model Centre
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3 minutes ago, Jonboy said:

Regarding your payment issue some of our European customers use transferwise to pay us cross borders, as a better value service than their banks and with less hassle.

 

Many thanks. I shall look into that. Some of our retailing colleagues with different banks have had to pay £25 to their own bank and approximately £13 to the receiving bank in Scandanavia.

 

Hopefully the company can resolve the issue themselves as I know it is putting off UK retailers ordering as their is difficulty in paying for the goods. We will be changing banks soon, I had to submit a seven page form for their consideration and they still decided not to allow the money out of our bank account. Bless.

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1 hour ago, Widnes Model Centre said:

 

 

I can see your point Colin.

 

When we were starting out as a Model Shop, there were decisions to make as to set up, cost, borrowing from Banks etc. Becoming a Limited Company has costs involved.

 

Borrowing from a Bank in 2010, impossible, no matter what our status was. They were just not lending. We went with using our own money. We knew that we would never seek to get out of any finacial trouble by partly hiding behind LC status. It was for us an uneccesary expense. We are still unable to take on any form of borrowing due to our ages without the borrowing being "secured". Not on the business but on our house. We haven't gone down that route.

 

We all know Limited Companies who have walked away from their responsibilites this year. We won't have debts on our conscience, unlike some as you well know.

 

This is the one company that we have a low credit limit with. The credit limit we have with a similar company is £30,000.

 

Our current stock level is approximaely £250,000. As of this morning, we owe slightly less than £4,000. None of that debt is due just now.

 

A bit off topic, but may show you some of the difficulties that lie ahead possibly at the end of January 2020. Part of the £4,000 we owe is to a company based in Scandinavia. It is actually £600 ish. Our bank is making it very difficult for us to pay this amount. It is a newly formed company that is part of one of the biggest toy manufacturers/exporters/retailers certainly in Europe. As they have no Credit History as the newly formed company, the Bank believes it may be trying to obtain money from us. They are, we already have the goods !! The company is opening a Bank Account in the UK to get around this problem. But that isn't as easy for them as it used to.

 

Having such a small debt to asset ration must be commended, many would wish to be in the same boat, I think to have a good credit rating you need to borrow and show regular repayments. Sometimes being prudent actually works against you 

 

 

28 minutes ago, Widnes Model Centre said:

 

Many thanks. I shall look into that. Some of our retailing colleagues with different banks have had to pay £25 to their own bank and approximately £13 to the receiving bank in Scandanavia.

 

Hopefully the company can resolve the issue themselves as I know it is putting off UK retailers ordering as their is difficulty in paying for the goods. We will be changing banks soon, I had to submit a seven page form for their consideration and they still decided not to allow the money out of our bank account. Bless.

 

 

Banks are very strange things, they like people/businesses they can milk. Keeping your affairs in order reduces their ability. I would have thought transfering funds would be simple even across borders, especially if the company is part of a larger successful group, I find it strange the company had not foreseen this issue and taken the appropriate steps.

 

In the old days you could speak with a human being and the issue would be resolved, plus its your money and the bank should act on your directions (I would complain to them). If its most retailers having a similar issue, then its up to the company to set up a trading account within the UK. With Brexit looking done and dusted we will be dealing with more cross boarder banking in the future, banks manage to do this for personal accounts. I can see the need to check its a non fraudulent activity, but this should be (and in the future needs to be) quite easy to set up 

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12 minutes ago, hayfield said:

 I think to have a good credit rating you need to borrow and show regular repayments. 

 

 

I agree. A long time ago I had got into debt then successfully got out again but I was left with no credit rating.  On advice I started to save with a credit union, then borrowed a few hundred I didn't need. I made the repayments for a few months, the cleared the loan completely.  I repeated this a few times, each time borrowing a larger amount.  It worked. I was able to get a mortgage to buy a house based on my now good credit rating.

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4 minutes ago, hayfield said:

 

Having such a small debt to asset ration must be commended, many would wish to be in the same boat, I think to have a good credit rating you need to borrow and show regular repayments. Sometimes being prudent actually works against you 

 

 

 

 

Banks are very strange things, they like people/businesses they can milk. Keeping your affairs in order reduces their ability. I would have thought transfering funds would be simple even across borders, especially if the company is part of a larger successful group, I find it strange the company had not foreseen this issue and taken the appropriate steps.

 

I don’t think they anticipated the problem with UK banks. It appears to have been when they took over an existing company outside of Scandinavia. To be fair the company have told us not to worry about the payment and they will resolve the problem.

4 minutes ago, hayfield said:

 

In the old days you could speak with a human being and the issue would be resolved, plus its your money and the bank should act on your directions (I would complain to them). If its most retailers having a similar issue, then its up to the company to set up a trading account within the UK. With Brexit looking done and dusted we will be dealing with more cross boarder banking in the future, banks manage to do this for personal accounts. I can see the need to check its a non fraudulent activity, but this should be (and in the future needs to be) quite easy to set up 

 

We do have, especially from around August onwards a large amount of goods on credit as we stock up for Christmas. These are of course items actually available. New releases etc we cannot account for. They are always paid on time, so no issues there.

 

I actually think that not having claimed for PPI, as we didn’t take it out in the first place has not done us any favours. Does that mean we are a risk?

 

Strange thing borrowing, we can borrow over £300,000 against our house. But we have to repay that amount by 29/9/2020 as we appear to be then a risk because of our age!

 

You never know who is looking at RM Web. I have just had an email with an offer of a large amount of money from a nice lady in Nigeria. She only needs our bank account and she will transfer the money today. How kind.

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