how are you my friend I hope your day is going well it's you ping here thank you
for checking in with me today is a video that you must watch it's one of the
essential videos that you need to watch to run your business successfully
because it has 100% to do with your money so let's get started ok my friend
once you kick start your business especially after you start to sell your
product so successfully you will quickly realize that you will need a continued
cash flow to sustain your sales so on one side you will have the cash inflow
coming either from Amazon or your own website on the other side you will have
the cash outflow to pay out either the product or service providers since you
decide how much you're gonna sell and I teach you the sourcing side of the
business I'll explain the two most important
factors that you need to understand how these two factors are going to determine
your cash outflow on the sourcing side the two most important factors in
determining your cash outflow one is the lead time another is the payment term
these two are a pair Lee time and a payment term we cannot talk cash outflow
without talking the Lee time and payment term together so let's elaborate a
little bit okay let's talk about the lead time first lead time should be
given with a nickname called dead time why is that because this lead time is
the period of a waiting time from the moment you place your purchase water
here to the time where the product is available for you to sell and convert
this product to cash this period of time nothing could happen but wait so
literally it's a dead time especially when you prepaid for your
product nothing is happening to your cash so if you are in the training
course especially if you have a watched the inventory planning module this
should be a no-brainer to you you should really understand the killing effect of
the long lead time why I am saying that the longley time has the killing effect
it's because not only you have all these cash tied up in this waiting period
there's nothing you can do about it but wait but also the longer you have to
wait the more likely you are going to be wrong with your inventory forecast one
is that during this long time of waiting you run out of stock now you are
panicked you need to estimate the icepad idea product either air frayed or you're
anxious pushing your suppliers to finish the product finish the production sooner
as soon as possible I'm out of stock my PSR is dropping I need to backfill my
product please PLEASE rush the production help me finish the production
sooner that is the anxiety you you have to go through because you're running out
of stock and you have no choice but to wait for this long period of time that's
one side of the risk of having long lead time the other side of the risk you
being wrong it's because you know you're gonna wait for a long period of time and
you over predicted how many you're gonna sell what end up happening is once you
receive the shipment finally you realize that you have too many in stock
eventually you may end up having to pay to Amazon for long-term storage fee or
whatever warehouse you're using you see the killing effect if the long lead time
is not only you have all these cash tied up but also the risk of running either
out of stock or ordered too many that is the lead time plane into how much cash
you're going to burn now you understand the one factor lead time and how much it
plays into your cash situation the second factor is
the payment term what does payment term has anything to
do with your cash you guessed it the exact opposite the longer of the payment
term you can get from your suppliers the more cash you can save because you can
delay your payment let's say if the supplier Lita Mae is one day and the
payment day to payment term is 30 days now you can literally use other people's
money to run your business because they can produce it in one day you can sell
it in a day or two or a week and you don't even have to pay the supplier in
30 days all of the sudden it's free money for you to run your business the
business reality for most Amazon FBA sellers is this the time side we're
talking about a seventy five to ninety days from the day you'll place your
purchase order to the day where amazon receive your product it takes at least a
75 to 90 days assuming your ocean freight your product not air frating
because it takes 30 days to produce 30 days to ship and a couple weeks in
between to handling your shipment or receiving your shipment on the payment
term side we're normally talking about 30 percent down payment
70% paid to the supplier when you take your shipment we're talking about
significantly cash done to carry this infantry from the time you place the
order to the time where you can sell your product so the lee time and a
payment term are the two most important factors in terms of your cash flow
impact i want you to understand the relationship of these two factors so you
can focus on negotiating a better lee time a better payment term to improve
the health of your business if you wanted to learn how to negotiate a
better payment terms and potentially reduce lead time so
free up your cash I suggest you sign up my training course those training videos
are exclusive for those who are super serious about their business if you are
one of those people who are incredibly driven to be successful I would be so
delighted to have you in the elite sourcing warriors training group I would
share with you everything I know about sourcing to help you save money alright
my friend I hope you are enjoying this video until the next time I'll see you
soon and you have a good day