Upfront payment versus buying credit

Magic A

Just wondering do people see much of a difference % wise, between paying for supplies up front versus settling the account at year end. With the irregular cash flow in suckling, we tend to clear most large items towards the end of the year, this year we got around 5% off when clearing the account which I thought was good. It made me think even if I could buy big ticket items like fertiliser, feed, bale wrap in advance would there be much of a cash difference.

Bass Reeves

You have to shop around. Most merchants and co-op I deal with will discount very little. On fertilizer I shop around at start of year and buy it in one tranche. Definately I see a difference with a few lads.

There can be a huge difference in ration prices between different supports at any one time and that even from asking the price. Are they adding interest to the account. It can be as high as 1%per month. With interest rates of 2-3% per month for big business there is a massive margin there. 5% sounds massive discounting it and more must be added on elsewhere especially on big ticket items.

K.G.

Magic A wrote: »

Just wondering do people see much of a difference % wise, between paying for supplies up front versus settling the account at year end. With the irregular cash flow in suckling, we tend to clear most large items towards the end of the year, this year we got around 5% off when clearing the account which I thought was good. It made me think even if I could buy big ticket items like fertiliser, feed, bale wrap in advance would there be much of a cash difference.

Every thing is different but the only way to get a deal is pay on the day.once it goes on account you are at nothing

Jb1989

K.G. wrote: »

Every thing is different but the only way to get a deal is pay on the day.once it goes on account you are at nothing

Most start up Businesses run on credit, so to say the account leaves you at nothing is not completely true.

Dunedin

Bass Reeves wrote: »

You have to shop around. Most merchants and co-op I deal with will discount very little. On fertilizer I shop around at start of year and buy it in one tranche. Definately I see a difference with a few lads.

.

Price of fertiliser generally varies a bit as most merchants will have stock from the year before and the price is set at what they bought it in. It’s a gamble they often take if they think that it’s going to rise but occasionally it goes down and they’re left with dear stock so they just pass on to farmer.

K.G.

Jb1989 wrote: »

Most start up Businesses run on credit, so to say the account leaves you at nothing is not completely true.

Absolutely but a bank would be cheaper.its not so much the interest rate,every business has 3 prices and the best price always payment on delivery.

Bass Reeves

Dunedin wrote: »

Price of fertiliser generally varies a bit as most merchants will have stock from the year before and the price is set at what they bought it in. It’s a gamble they often take if they think that it’s going to rise but occasionally it goes down and they’re left with dear stock so they just pass on to farmer.

I agree with all that. But if you put your fertlizer directly onto an account in the co-op you are dealing with as opposed to pricing around I be surprised if there was not a 10-20/ton difference.pay at the end of the year will add a credit charge onto it. Lads then think it's great if the co-op or Merchant knocks a few bob off the bill.

At 1%/month will add about 20/ton to urea and 15 to CAN over 6-7months. It easy know it off if you are throwing it on

Anto_Meath

The big one I notice a massive difference on is the vets, pay on the day is a lot cheaper than paying on account.
I do notice I getting value on account with the AI, ring them when I get the September statement and clear all it works out a nice bit cheaper. Regarding the merchant it can vary, sometime they will say POD and I can knock €20 a tonne off or often I will let it run with a few other bits and bobs and then you might get a fee euro off but generally I find POD is the better option.

Magic A

Sounds like 4% to 8% off the list price for payment on delivery is a good rule of thumb, interest made up just under 1% of the my balance so sound like the discount was at the lower end of what you could expect for payment up front.

Siamsa Sessions

Depends on how much you’re buying too. No one wants to do you a deal if you’re buying small amounts overall

kk.man

I pay for my fertilizer on the day and phone around to get the best price. I let my meal bill run as I feed a good few cattle over a period of months. The vet gives 10pc off if you pay on the day and or by the end of the month but I seen it stretched further.

I always debated this whether to pay or not. They be a few savvy big farmers near me who always go on account. There must be benefits.

I paid my meal bill this year after months but before the 1st instalment of the Basic Payment was made. I enquired the cash price for the meal before hand and when I paid up I was charged the cash price minus a few quid discount.

orm0nd

Another way to max out credit is by wise use of a credit card.

You can get up to 6 or 7 weeks by watching the dates.

Thankfully I don't need this facility now but still use it and it gives me some satisfaction getting something off the banks in return for the high interest rates we paid back in the 70s and 80s.

Also other than the government fee, there are no banking fees for using the card.

It's vital that the bill is cleared monthly though as interest rates are high on overdue balances.

Lady Haywire

Varies here depending on what we're buying! We buy meal by the pallet, as come payment time he normally knocks off about €50, last week it was €65 & got a bottle as well.
Pay on the day or before the end of the month in the vets, cheaper than leaving things to account. Fertiliser is ordered & then paid for whenever we're next in the store but it wouldn't be our biggest expense.
Half of the time we're chasing contractors trying to get them to give us an invoice & take a cheque!

Track9

Here, on the bigger ticket items ( Fertiliser, Fencing Posts, Wire, etc ) I find we can do a good deal paying on delivery during the first 4/5 months of the year.
Think that's due to the fact that the Merchants are Delivering a lot of supplies on credit in the first part of the year & a lot of that would be on credit. So cash deals are given a good discount in the earlier part of the year, again as mentioned above perhaps 3- 8 % approx.