Cooperation with retailers is the ultimate dream for every supplier, but it is often accompanied by difficulties and misunderstandings on both sides. The only chance to convince retail chains to listen to themselves is to give them exclusive goods, but not every company has such products. However, there is an easier way to gain retailer’s attention: communicate with them through the intermediary factor.
How to “get into the network?”
Retailers are the monopolists of the market, which allows them to dictate their own terms to the suppliers. It is necessary to match them as large network companies provide the bulk of sales. Among their nominated requirements prevail:
- ensuring a certain volume and adequate range of supply;
- regular price reductions for certain groups of goods during the promotions;
- bonuses system of discounts for customers.
In addition, most of the networks has its own rules of document management and logistics, the neglect of which by the provider may cause risks of delinquency.
It is difficult even for the largest companies to comply with stringent requirements that are imposed by networks. Small and medium-sized businesses have more difficulties, because they have less possibilities.
At the same time, provision of deferred payment is indispensable condition of work with retailers. With regard to food products, it is enshrined in law and is not more than 45 days, non-food items deferment may be 90-120 days.
Search for additional sources of funding for the provision of such deferments usually lead to the need for business cooperation with a factoring company. This option perfectly solves the problem of cash shortages. Factoring allows companies to receive money immediately after shipment without receivables freezing. These funds can be used to pay for contractors’ work or for other internal purposes.
How to enter into the factoring agreement on favorable terms?
Unfortunately, not all contractors are ready to work on factoring terms. Some networks agree to sign the agreement only on condition of cooperation with a particular bank, where the supplier is obliged to open an account. The part of retailers may refuse from services of intermediary factor, fearing the possibility of disclosure of inside information.
Sometimes networks go towards their counterparts and offer to conclude a factoring agreement. Specifically for such clients factor-mediator have developed a complex service. Cooperation of suppliers and retailers built under this scheme is mutually beneficial, making the interaction between the client, the debtor and the factor comfortable and effective.