Import, export and distribution
A distributor makes a thin margin on a large volume and finances the whole cycle from the supplier's invoice to the customer's payment. Landed cost moves with currency, freight and duties. Inventory sits in a warehouse in Richmond or Delta waiting for orders. Customers want terms and suppliers want deposits. We bring product-level and cycle-level finance to importers, exporters and distributors across British Columbia, working alongside their CPA and their customs broker.
How the money works
- Landed cost includes freight, duties, brokerage, currency and warehousing, and a price set from the supplier's invoice alone is below cost
- The cash conversion cycle is long, with deposits to suppliers, weeks in transit, weeks on the shelf and weeks of customer terms
- Currency movements change margin between order and payment, so a sale priced in Canadian dollars against a cost in another currency carries a risk that needs managing
- A few large customers and a few key suppliers dominate, so terms with each decide the cash position
The moves we make
- A landed cost model by product that updates with freight, duty and currency, feeding pricing and margin reporting
- A cash conversion cycle analysis with targets for inventory days, receivable days and payable days
- Currency exposure measured and a hedging conversation prepared with your bank or a licensed provider
- Customer and supplier terms renegotiated with the data, and a collections routine that runs weekly
Where cash and margin leak
Margin leaks in prices set before the freight invoice arrived, in currency moves nobody priced, in duty classifications that could be better with your broker's help, in freight booked late, and in discounts given to large customers whose cost to serve was never counted.
Cash leaks in inventory bought for a volume discount that sits for a year, in supplier deposits paid before any customer order exists, in customer terms longer than supplier terms, and in a line of credit that quietly became permanent working capital.
The numbers to watch every week
Gross margin by product on landed cost, not invoice cost. Inventory days and weeks of stock by product line. Receivable days by customer. Payable days by supplier. Open purchase orders and their cash commitment by month. Currency exposure on open orders. Cash low point over the next thirteen weeks.
Reviewed weekly, these tell a distributor which products to reorder, which customers to chase and whether the next container is affordable before it is booked.
How pricing works in distribution
Prices are set from landed cost plus a margin that reflects the service, the terms and the volume given to each customer. The margin is thin, so the landed cost has to be right and has to update when freight, duty or currency move. A price list refreshed once a year in a year when freight doubled is a loss-making price list.
Customer terms are part of the price. A customer on sixty-day terms costs more to serve than one who pays on delivery, and the price should reflect it. We build the landed cost model and the pricing rules together, and we show the margin by customer after terms and cost to serve.
Questions from import, export and distribution owners
How do we handle currency risk?
Measure it first: the value of open orders and payables in each currency and the margin impact of a move. Then price with a buffer, match currency inflows and outflows where you can, and discuss hedging products with your bank or a licensed provider. We prepare the numbers. The hedging advice is theirs.
What should our inventory level be?
Enough to cover demand during the supplier's lead time plus a safety margin, by product, and no more. Long lead times from overseas suppliers mean larger buffers for fast movers and smaller orders for slow ones. We calculate reorder points from your own demand and transit data.
Can you help us get better terms from suppliers and customers?
Yes. We prepare the volume, the payment history and the ask, and we join or run the conversation with you. Suppliers extend terms to reliable payers who ask, and customers accept shorter terms when the price and the service are clear.
Start with a finance review.
Ninety minutes with Ali on your cash, margin and pricing. You leave with the four numbers to watch and the two or three moves that change them, whether or not we work together.