Forms of sale: to sell cash, on the credit or consigment?

Three forms exist to sell a product: cash, the credit and consigment, we see next the concept of each of them, and then, some recommendations:

Cash sale

One occurs when a product is sold and the total of its value at the same moment of the transaction is received.

Sale on the credit

One occurs when a product is sold and it remembers acquire a part or the total of his value in a determined term, for example, to 30 days.

Sale to consigment

One occurs when a product to an intermediary is sold and it is received as the intermediary is selling the product to the final consumer.

A sale to consigment can occur, for example, in case we are a producing company of textiles and sell our products to a store (intermediary), which will sell products to the public as well; to this store we left a small assortment him of our products, and we visited soon it weekly receiving only by the products that it has sold the public.

If in this case we had sold on the credit, for example, to 60 days, the store would not pay to us until the term has been fulfilled agreed, thus has sold before all our products; however with the sale to consigment, we can be receiving although it is a product per week.

What sale form to use

Whenever it is possible to us, we must try to cash sell, since, that way, we can obtain the money quickly product of the sale, and thus to be able to use it to produce more products or to buy major merchandize.

Nevertheless, sometimes our clients do not count on sufficient liquidity like being able to pay to us immediately, reason why to be able to advance in our business, we must grant credit to them (to sell to them on the credit).

When we make use of intermediaries to sell our products, an alternative to the sales on the credit, is the sales to consigment.

The sales to consigment allow us to catch more points of sale for our products, since it is not more probable that the intermediary businesses accept our products, when not being forced to have to pay to us immediately, nor when having to commit itself either acquiring debts.

For that same reason the sales to consigment can be a good option when our product is still not known in the market, and it becomes difficult to find intermediaries to us who want to acquire our products soon they to offer them.

Another one of the advantages of the sale to consigment is that we can control the levels of prices, which would have to be uniform in all the points of sale that offer our products.