Secret Distributor: Is this the toy business or banking business?

Our Secret Distributor kicks off the new year by questioning the trade's financial models
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It seems that more toy companies are getting into the banking business. Order now, get delivered next week and pay on the never, never.

You can even return it if you don't sell it.

How sustainable is this model? How long will those companies be able to sustain this artificial growth. If they are able to finance this, they must be on a hell of a margin and therefore squeezing margin out of the retailers.

My suppliers do not give me extended credit terms, for the most part, I actually pay for the goods before they hit my warehouse so any credit terms I give to my customers are very much at my very own cost.

I recently visited one of my customers who had been on the slow payers list for quite a while. Not that I was worried but I was actually passing by so decided to pop in.

I was not really surprised when I asked H, the owner, to hear that all of the goods I had provided some four months ago were almost all sold. Only a few stragglers left.

I could see delivery from one of my competitors being unpacked as I was in the shop.

As it happens, I do share slow payers information with some of my colleagues, which is totally legal. I do know that this customer has been on proforma with this particular supplier for a while as too many bills were late, even very late like mine.

I did feel a little bit like a mug really as clearly my stock with the very extended credit terms means that I have actually financed the purchase from my competitor.

Guess what? H is now strictly on proforma.

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