[HuggyBear]

As my website is new blah blah blah, I cant get credit accounts set up with suppliers as i dont have any trade history or yet accounts, so is there any other way where I can get products ordered from suppliers on credit?

Was looking at invoice factoring but dont really understand it...

I just need some credit somewhere that I can use to pay for products to be shipped without me having to wait for payments to clear into my bank account...

[Peter W]

As a new business it is always going to be difficult to get unsecured trade finance.

Invoice factoring is expensive, and not really appropriate if you are only waiting about a week for payments to clear.

You may need to fund the working capital requirements of the business by investing some of your own funds, to get it going. Unless you have enough savings, this would mean a personal loan, or some form of borrowing against your property.

[HuggyBear]

I applied for a business overdraft the other day of £1000 - i doubt the bank will say yes but I can try for nothing...

[OldWelshGuy]

Credit cards is probably the most simple.

[Peter W]

Originally Posted by OldWelshGuy

Credit cards is probably the most simple.

I agree, for that amount there should be no problem. Unless you churn interest-free periods on different cards then it won't be cheap, but at least it is an option.

[UKSBD]

Don't mean to be negative, but do you really think t is wise to start
trading in such a high cost product if you can't even raise £1000 in capital?

[James Smith]

Going back to the original question, factoring is a very simple concept although there are lots of variations.

In short they loan you money against the issue of your invoice and not the receipt of the funds. Typically 75%. You get about 20% when the client pays and they keep typically about 5% in fees. Sometimes less. NB if the client doesn't pay the factoring company can claw this back from you. Your customers pay the factor and not you which means you are to an extent cut out of the debt collection process although in reality you will still need to get actively involved as the factors just charge you more interest if your clients doest pay!

Personally I wouldn't go into business using a factor out of choice, however it is spun these days it is very expensive, especially for smaller businesses, and really is the "lender of last resort". They tend to have rather fierce terms including forcing you to put all your sales through them - i.e. its very hard to break out of the cycle of using them when they are swiping most of your profit margins!

However in your case you are only waiting for the credit card account to clear then this is not as above going to be appropriate although you could perhaps set something up along these lines. If you are selling laptops I cant see how you are doing to do it without any cash. Any credit costs will presumably wipe out your margins.

How about simply asking for bank transfers - these now clear next day between most banks? You save the 3% credit card fee too...

Hope that explains a little more

Regards,

[IP2]

A few thoughts and a couple of concerns...

Have you approached a bank for a merchant account to be able to take credit card payments? Banks certainly used to be quite keen to set a merchant account (I was taking credit card payments from the age of 16, so I figure their criteria can't be too stringent, that way you would have your customers money in the bank to pay your supplier straight away without needing credit.

Secondly if you haven't already, speak to your suppliers and try and negotiate a short credit facility (say seven days) from the outset, some companies will be slightly flexible if the credit timescale is kept short, although it is probably not something they would outright offer to bring to your attention, it is certainly worth talking to them about.

Now to my concerns...with very limited capital, have you considered your situation if you get a customer return of a fairly high end product? And secondly on your lower priced items (as I assume you do not plan to carry stock) how you will meet minimum order levels while you are getting momentum?

[HuggyBear]

Card Payments - High Risk Industry so they charge more
I have asked suppliers about credit accounts but they asked for trade references of suppliers I have credit accounts already with, or a copy of my accounts

I am not required to have MOQ's with suppliers as I pay them a monthly fee to abolish this - With returns - I just have to hope that a customer doesn't want to return a non-faulty product - I don't know if my shipping and returns info is legal or not

"Dispatch
- All orders for items that are in stock are dispatched within 14 working days. All deliveries are made from the United Kingdom. Delivery to UK Mainland is £9.95 for items weighing upto 20KG. £1.95 will be added per Kilogram thereafter. For offshore/remote regions delivery costs and delivery times may be extra - Please contact us for details.

Returns
- In case you are not happy with your purchase, please return the item within 14 days, along with the original invoice. We will credit your account, or exchange the item for another selection.
- In case of returns shipping and handling charges are not refundable. The goods must be complete, undamaged and unsoiled and if possible with the original packaging and labels intact.
- If any of these conditions are not met and the product is found to be in working order, the management reserve the right to charge a 45% re-stocking fee. - This does not affect your statutory rights"

[Beneddie1112]

I don't think your returns policy is in line with the distance selling regulations, I believe you have to offer a full refund within 28 days if the buyer decides to return.

Please don't take this as gospel truth however,

Cheers,
Ben