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There are many challenges in running a pallet business. You need to constantly focus on vendor chain and supply management while closely tracking customer orders and payments. Meanwhile, throughout it all, you must carefully control your cash flow so you don’t run out of money before you need it to keep your business going. Fortunately, there are a number of valuable and effective budgeting tips for owners of pallet businesses that can help you make sure you get the most out of the money you have and bring in more money faster in order to replenish the funds you spend.
The better you finance your pallet business, the more money you’ll have to work within your budget. That’s why one of the fundamental budgeting tips for owners of pallet businesses is to make use of the host of financing options available to you.
Don’t Only Have Corporate Clients
Corporate clients may be able to pay more and can be more reliable than potentially struggling small businesses, but big corporations also tend to pay slower and request payment terms.
The problem with payment terms is that they essentially amount to using your pallets for free until the client pays you for them. This is akin to providing these large corporations with an interest-free loan on their pallets. You’re losing money from your budget, making it harder for you to run your business and fulfill your financial obligations in the meantime.
Therefore, work with both large and small clients to help ensure that your inflow of money is at least as steady as your outflow.
Consider Receivables Factoring
Receivables factoring allows you to use industry and commercial customers to finance your open invoices. These creditworthy parties will pay you the money invoiced immediately, then hold onto the invoice as collateral until the customer pays you. Not only does this tool allow you to receive the necessary funds for your budget without delay, but it also makes you freer to accept and appease corporate clients who request or demand payment terms.
As distinct from a business loan, receivables factoring involves the outright purchase of your receivables rather than a loan against them. The process usually goes like this:
There is, of course, a fee for factoring, though this is taken out of the rebate amount and not the advance. The amount of this fee depends on the size of your pallet business and the client’s creditworthiness. To be eligible for factoring, your invoices must have no liens against them, and your business must have no tax or legal problems.
One way to maximize the value you get out of the pallets you already own is to recycle them once their use for sale has expired. There are a variety of ways a pallet business can recycle old or damaged pallets. You can repair and reuse them, which allows you to extend the life cycle of your existing stock of pallets. You also can grind them for boiler fuel or mulch, which allows you to still make money from pallets for which you no longer have use.
You can also save money on pallets in your inventory by using existing pallets to build up your stock of pallets rather than building them yourself, whether in-house or outsourced. Just some of the places you can find perfectly reusable pallets for cheap or even free include:
If you plan to recycle pallets, you may have better chances of success if you standardize your pallet sizes. Standardized pallets are more reusable, recyclable, and, therefore, more valuable than non-standardized pallets. One of the most popular sizes of pallets for recyclers is the GMA 48 x 40 standard pallet.
If you plan to repair pallets, consider doing the repairs in-house. In-house repairs can save you up to $3 or $4 per pallet.
Among the key budgeting tips for owners of pallet businesses are those involving avoiding skimping on certain costs upfront in order to prevent higher costs down the line. Whether you’re building pallets yourself, outsourcing pallet construction, or finding pallets available for sale or free, make sure you only stock high-quality pallets. Cheaper pallets may cost you less to build or acquire, but they can cost you much more in a shorter life cycle, requiring quicker and more frequent disposal and replacement. They also take up valuable space in your storage facility.
Higher-quality pallets tend to be easier to repair and reuse than lower-quality pallets. They also generally have a lower cost-per-trip than cheaper pallets since they can better endure the stress of travel.
It can also be worth investing in a warehouse or storage unit to store your pallets. Storing pallets in a warehouse or storage unit can provide greater security and protection from the elements than storing them in a garage or basement. By preventing loss and damage, you avoid the need to repair or replace pallets, allowing you to keep more money in your budget to run and grow your business.
Having a facility where you can store your pallets can also allow you to maintain a larger inventory, so you’ll have pallets available when new or larger orders come in.
How you sort your pallets helps determine how efficiently your business operates. A more efficient operation obviously helps maximize your budget. By properly sorting, you can also make the most of your limited storage space, potentially allowing you to carry a wider variety of pallets to fill a wider range of customer needs.
Of course, one of the best budgeting tips for owners of pallet businesses is simply to sell more pallets, and one of the best ways to do that is with good marketing. The more reputable and widely known your pallet business is among your target customers, the more business your company can attract. For help to improve your pallet branding, contact us today.
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