Payment Terms: What They Are and How to Negotiate
In this edition of the Tiege Hanley vlog, Aaron Marino discusses the logistics of pre-selling products and setting up payment terms with a manufacturer. Watch the whole video for some great business advice.
What’s Happening with Tiege?
Welcome to the latest installment of style guru Aaron Marino’s “Starting a Business and Building a Brand” series. To start, Aaron gives an update on what’s happening with Tiege Hanley. With the website practically complete, Aaron discusses the possibility of a soft launch presale of Tiege products. He asks the viewers if they’d be interested in that kind of launch and how long they’d be willing to wait for it.
Business Finances: Payment Terms
Next, Aaron goes into detail about an important business-related question that was posed on last week’s vlog: How much money should you have before starting a business?
Aaron answers the question by acknowledging that every business and scenario is different, so the amount of money needed varies greatly from one startup to another. However, many businesses operate under what are known as “payment terms” when financing their businesses in order to get their products off the ground without a huge upfront reserve.
How Payment Terms Work
Payment terms are set by suppliers and customers, including individual wholesalers and even consumers, to control the terms under which a payment is made. These terms may cover things like when a payment is expected as well as any specific conditions on the payment and any discounts the buyer might receive.
Next, Aaron covers negotiating terms and provides some examples of how you can make some common payment terms work for your unique business. He also discusses the need for cash flow, which can be acquired through a credit card as long as the balance is paid off quickly so as to avoid high interest charges.
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