How to use a credit card to purchase inventory
The purchase of inventory represents a challenge for all companies. It’s about having a catalog available to give customers certainty.
Having a credit card to purchase inventories is extremely useful because it guarantees supply even at some stage of financial imbalance.
Mechanics are simpler than it seems. These are some very useful tips for using this tool
1. Look for suppliers that accept it: In these times it is inconceivable that a business rejects this form of payment, which marginalizes it from negotiations and sales.
2. Notify the bank: In case the supplier is in a different country or the purchase is very high, the bank must be advised because for security reasons they usually block outliers. To prevent a contingency of this type from occurring and obstructing the operation, it is best to pre-warn.
3. Calculate costs: When a purchase of inventory is made on credit, the acquirer must calculate the interests and charges of the bank as part of the cost of the product. So you can specify the final price and estimate the profits. If the profit margin is very small then another payment option will have to be reconsidered. It is not about losing.
Profit margins can be penalized as long as you get a profit or avoid a loss
For example, if you need to supply a customer who usually buys you other items, it may be worth it because you guarantee the other operations. You have to be very careful and analyze the cost-benefit of this transaction
A corporate card is an open and previously established line of credit in which the bank already has the risks calculated. The great advantage is that in emergency or opportunity situations you do not have to go through an approval and waiting process to get the loan, but it is available instantly.
As part of its handling you must be careful with:
- Interest rates
- Cutting dates
- Monthly payments
Interest rates can be negotiated from the beginning or make some adjustments if the debt is very large. The big advantage is that there are banking institutions that are always willing to renegotiate or help their customers.
They are interested in paying and you are interested in paying, so it is only a matter of reconciling both objectives.
You will see that this tool will help you not only to maintain your cash flow but also to acquire other types of economic and administrative benefits such as the famous rewards programs.