Every industry has its norms, and the mobile resale industry is no different. There is one standard within the mobile industry that can leave buyers a little bit jittery: In the mobile resale world, the expectation among distributors is that buyers will provide full payment for orders before shipping. This can feel risky when ordering high-value bulk shipments from a new supplier for the first time. At WeSellCellular, we empower buyers to feel confident regarding the grade of the product they’re purchasing. In order to help first-time buyers get comfortable with our products, we encourage them to purchase small, sample orders before placing larger orders. Unfortunately, we’re also aware that not every distributor takes steps such as these to offer transparency and quality with every purchase.
However, even if you are confident in the quality of products of your new supplier, inflexibility in payment methods can cause a financial strain on your business. It is important to inquire about whether a supplier offers other payment options and to understand the pros and cons of each option. If a supplier doesn’t offer any flexibility, it will be up to you to determine if that is a red flag regarding the company you’re doing business with.
Here are the various payment options that may be available to you when placing bulk device orders:
Automated Clearing House (ACH)
ACH is a bank-to-bank transfer. The benefit of this option is that it has a lower fee than wiring funds. ACH transfers are usually free or with a nominal fee of between $3 and $10 per transaction. With wiring, your fees can range from $25 (domestic) to $40 (international).
The downside to ACH is that it’s not instant. You can typically expect a waiting period of one to three days before funds arrive in the seller’s account. This can pose a problem if you’re in a time crunch while waiting for fresh merchandise due to the fact that most suppliers will not ship your devices until the funds have been received in their accounts.
- Pro: Much less expensive than wiring funds.
- Con: Slower than wiring funds.
Cash on Delivery (COD)
Cash on delivery is a method that enables you to pay once your phones arrive. With this method of payment, the shipping carrier collects a money order from you upon delivery. COD enables you to manage your cash flows more tightly, since you do not have to float cash in between the time your order is placed and when it arrives at your facility. However, many large suppliers do not accept COD as there is a fraud risk in the event that the purchaser uses a fake money order. Only suppliers that are confident in their abilities to vet potential risky customers are equipped to offer this option.
- Pro: Provides breathing room for your cash flow.
- Con: Not accepted by many suppliers.
If you have a large credit line, you may want to negotiate the ability to pay via credit card. Some of the larger mobile wholesalers accept credit card payments from major companies like American Express, Mastercard, and Visa. Like COD, credit card is a good option if you’re looking for a way to manage cash flow. With a credit card, you typically have 30 days to pay, which enables even more flexibility than COD.
Still, you should be prepared for suppliers to charge a convenience fee when you pay with credit card, as sellers are charged on the vendor end when they accept these payments. American Express charges vendors between 2.5 and 3.5 percent per transaction. Visa and Mastercard charge between 1.5 and 2.5 percent. As a result of the added fee, credit card is only a great option if the additional breathing room with regard to your cash flow is a make-or-break need.
- Pro: Allows you to defer your cash payments by 30 days
- Con: Fees increase the cost of your order.
Suppliers are not usually willing to take on the risk of nonpayment. Larger suppliers willing to offer payment terms often pass on the liability to underwriters. This typically means using Euler-Hermes, Behalf or another third-party firm to facilitate a financing plan that includes risk mitigation using what is referred to as “trade credit insurance.” For this reason, if a supplier does provide payment terms, you’ll likely be applying for financing approval through the third-party company’s portal. Generally, you can complete the process fully online.
You will have to go through a qualification process that includes a background check. You’ll also pay fees for the privilege of financing your order. These fees will vary by financer. For instance, Behalf charges 1 to 3 percent of your balance for every 30-day period you owe money.
- Pro: More time to pay.
- Con: Background check and fees.
Final Thoughts on Payment Options for Used Phones
The mobile resale market is a unique industry where the risk burden is primarily placed on the buyer due to the “wire in advance” policy of most suppliers. Buyers are tasked with coming up with payment on-demand while also taking on the risk associated with poor-quality products. This is why working with a trustworthy distributor with a policy of transparency and a reputation for quality is so vital. The thin margins in the wholesale cell phone industry mean that pouring capital into what turns out to be a “bad batch” can be difficult or impossible to recover from. This is especially true if you’re counting on revenue from the sale of one batch of devices to cover your next replenishment order.
At WeSellCellular, not only do we take pride in our quality but we also offer flexible and fair payment options for our valued customers. As experts in the resale industry, we understand the capital and time constraints you’re working under when placing orders. Whether you buy from us or someone else, we want you to understand the options that are out there so that you ask the right questions when sourcing inventory.