Factoring Companies Guidebook
Paid Reserves
Definition
Page 63 of 105
The Drinks industry (predominately wines) terms of stock ordered and paid for by specific customers, which they hold in Reserve until the customer requests delivery.
Concerns
The concerns with this type of trade are:-
- When are the customers invoiced?
- When are the goods paid for?
Are the goods sold separately and easily identifiable?
There is a danger of the goods being pre-invoiced, not only on receipt of the order but also on receipt of goods by the Client and taking them into stock. If the goods are not held separately and easily identifiable, there is also the potential for them being utilised to meet other orders and then not being available for the original customer.
Identification
Make enquiries of the Client/Prospect as to whether they are involved in this type of trading.
