An Ateneo Graduate School of Business Advantage
I have a daughter who is into selling of beauty equipment on line. This November, her sales was almost a million. Not bad for a one woman show who does business on line, without ads and sales organization. All she got is a driver, internet connection, a cellphone, and the car of her sister.
However, when I asked her whether she got plenty of money, she said she still needs to borrow; she is cash short. I asked her why? She said she accepted pdc. What?
Some comments and observation:
l. Early in the ball game, if you are playing the price game, go for velocity of money, maybe low margin but mostly cash;
2. If you must accept pdc or credit: grant only to people you know, price the credit terms higher (to cover your risk) be sure your downpayment covers the COGS in case your buyer is a bad risk;
3. If you must grant credit; increase your credit lines; match your receivables with your payables; if you do not have credit; avoid credit terms.
I hope she gets wiser. Kids now do not accept advise from their parents; even if the latter has experience and knowledge
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