How to Take Advantage of the Different Payment Terms Your Fastener Distributor Offers

Many times purchase managers and those working the order desk focus on price and availability when placing orders. They may not pay attention to the payment terms nor understand how those factors affect the overall cost of a products. If handled properly, the payment terms that your fastener distributor offers can make a big difference to the expense associated with those materials. Learning how to handle that factor is important.

Early Payment Discounts

Does your fastener distributor offer early payment discounts? These generally run from 0.5 to 2 percent of the invoice total before freight and taxes and are applicable when the invoice is paid in full before the due date. Some distributors offer a discount if the payment is received within ten days, others allow 15 to 20 days. Read the fine print on the bottom of the invoice or packing slip to determine whether any discounts apply.

Cash On Delivery

There are many circumstances where cash on delivery (or COD) is the preferred method of payment. New customers without an established credit and those who have a history of overdue payments may be required to handle their fastener order in this way. This could mean that the overall cost of the product is higher, since it will tie up cash immediately and usually well before your company has a chance to collect from your customer. 

There are times when COD terms will result in cost savings, but often this type of payment wreaks havoc on the cash flow of your company, especially if the fastener orders are large.

Credit Card Payments

The distributor may offer this as a convenience and the customer may appreciate the ability to handle their payments in this way. Find out whether the distributor will be charging a premium for credit card payment and whether or not they will accept your preferred type of charge card.

Online or Electronic Payments

The business world is moving away from checks and swiftly transitioning to electronic money transfers. This can save your business money on paper supplies, as well as on processing time and potentially on bank charges. It isn't offered by every fastener distributor and isn't advantageous in every circumstance, but electronic or online payments are convenient and may save your business money.