The Buyer As The Seller

Buyers on the acceptance, in conserving their credit ability, and establishing their credit standing, are therefore enabled to employ it to a greater extent than money itself.

The buyer, being at times the seller,-it must be remembered, if he advances the argument that he is not receiving as much benefit as the seller derives from the acceptance method, that his condition is frequently reversed and that he himself is as frequently seller as he is the buyer. If he gets acceptances from his trade, he cannot very well refuse to give them when his seller asks for them.

Acceptance Affords Buyer Better Terms Of Sale

In order that the buyer may receive the maximum of benefit from the trade acceptance, it will be necessary that he understand, first, the procedure involved and its use, thoroughly. The more the trade acceptance is used by the buyer, the more consideration he can demand. In other words, he must be on his job or else he is not going to get the advantage he is entitled to. He must know how to put it up to the seller that he is entitled to an advantage. He is giving the seller what the seller wants,-a trade acceptance. He is giving the seller something that is of value to him, whereby the latter acquires a good deal of advantages otherwise lost in the open book account system. This is worth something to the buyer, and if he is a wise buyer he will get something that no open account could get for him. Moreover, many sellers throughout the country who use the trade acceptance in their business, offer considerable advantages to acceptor buyers, in price, terms, discounts, etc.

Acceptance Of Advantage To Smaller Concern

The giving of a trade acceptance will do more for the small buyer than the open account method can do for him, because it will enable him to operate in competition with the bigger concern. As an example, let us take the case of a small jobber of limited capital. Let us assume that he is careful and efficient and has an opportunity to buy a quantity of goods at an advantageous price. Let us further assume the price of the goods to be One Thousand Dollars. He knows where he can make a turnover at a few hundred dollars profit. He knows also that he can buy on ninety days' time and that he will have to sell on ninety days' time, but there is a little gap of time in between the day he has to pay for the goods and the day he gets his payment, due to delivery, handling of the order, etc. He could not very well handle this transaction on open account for the bank would not lend him more than half of the selling price of his accounts receivable, besides requiring a deposit as additional security. In other words, the amount he could loan will be far less than the amount required for the carrying out of the transaction.

But if the small buyer resorts to the acceptance method, how easily this transaction could be financed. If the jobber knows where the goods are and where they can be bought and sold, he may give his acceptance for the purchase price at the time of buying. The seller's bank will cash the buyer's acceptance for him and give him his money. The jobber then takes the other man's acceptance for the selling price, turns it into his own bank and cashes his profit. The entire transaction is completed and the buyer has profited thereby. It has not cost him a dollar of his own money-a rather easy accomplishment. The procedure enables a small retailer to operate on a more extensive scale than would be possible on a cash or open account basis, where he has to go in and borrow the money required for the transaction.