The listserv is an automated broadcast email network. When you send a message to the listserv address, hundreds of listserv subscribers get your email message within a few seconds. If you receive a listserv message and use the "reply" function of your email software, your reply will go to all listserv subscribers. Below is an example of a listserv "discussion." The first message asks a question about forms management; the following seven are answers to it.

Recently, a forms management client of mine, a small community bank, hiredan individual down-sized from one of the big mega banks. We have workedhard to handle this customer's requirements and have managed to save themquite a bit of money over the last 3 years. Regardless, this individual isintent on shaking things up! Currently, the customer owns the inventorywhich we store. My client is requesting that we purchase the inventory then go on a "bill as ship". Accordingly, with much trepidation, I am looking at making the financial arrangements with my bank and will want to have my customer sign a contract. I would be interested to hear from or call any of the listserv members who do forms management as "bill as ship" and get feedback on structuring this contract. Ideally, I would like to find something boiler-plate and have my attorney modify as needed to fit this situation. What is the best way to set out to do a contract which protects my interest, covers the cost of the money that is out and locks in the business? Thanks for the feedback.

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It seems interesting that a bank wants you to "be the bank"!Our experience with "bill as ship" is that the accounting costs are muchgreater than the carrying cost. As I recall, the old NBFA Policy Manual had a section on bill as ship and some appropriate boilerplate.

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We don't allow our Form Management customers to bill as ship due to thetremendous problems that come with that. You will get stuck "holding thebag" when forms become obsolete or changes are necessary. The last thingcustomers want to do is pay for obsolete forms and have to order new onestoo. I would try to explain that whomever is carrying the inventory therewill be cost associated with that, there are no "free lunches". Maybe showhim how ordering on a "job lot" basis would be much more expensive if youwere to order only what they could store themselves. I guess my advicewould be to really question, even if you have a contract signed, if you can make a profit if he decides to stick you with a bunch of inventory that is no longer usable for whatever reason, what would you do? Going to court would be expensive. I wish you the best in a really tough situation.

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My experience with this type of customer is that they want you to pay forcarrying their inventory cost. You might contact Nolo Press in Berkeley, CA (they have a web site). They specialize in books and forms that helps you eliminate the need for a lawyer. If the truth be know, your main contract is the relationship you have. If they decide not to pay, it can be very difficult to collect.

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On the issue of vendor owned inventory...

Admittedly, I once was one of those customers who required my vendor to"own" my inventory. The arguments presented have been very good, but allow me to add perspective from the other side.

  1. Protecting my inventory at an off-site location:I could not protect the inventory. If it is to be insured it is the vendors responsiblity and having him take full financial responsibility for the inventory in his warehouse at any given time protects both of us.

  2. 10% overruns: What about the +/- 10% that is allowable in the printing industry? I never saw an order come in under 10%, but almost always at 10%. That is basically money in the vendors pocket. Having the vendor pay for the product up-front puts him in the same boat as I would be paying for the entire inventory up front. He worked harder with his print shop and any outside suppliers to keep the orders to the original quantity. That saved him money internally, though he probably did not make many friends of his suppliers.

  3. Cash Flow: Paying as we ordered forms kept our cash flow at a more even pace. I worked for a hospital and clinic group that always seemed to be short on cash, (I wonder where all that money was going...?).

    Paying as we ordered also kept us from having to make a lot of internalbookeeping moves with money as the orders on stock were placed.

  4. Storage Fees: I was charged a percentage fee for storage of my inventory. That was one of the reasons that I originally signed with that vendor as his charge was around 16% where the major vendors STARTED at 24%. That charge covered storage, inventory maintenance, picking in partial cartons or full, and delivery.
(NOTE: With the 10% overrun and the 16% storage charge that totals 26% OVER the already marked up price on some items. That almost makes up for the $5.00 Aspirins we were handing out to patients!)

Benefits and solutions to this arrangement
  1. Obsolescence Charges: I had contractual agreements that any inventory over 8 months would either be destroyed and the full charge (Product + 16%) would be added to the next monthly invoice. We, the vendor and me, had to work hard at making decisions on weather an item would be put into inventory. We decided, though not in the contract, that any item under 2000 would not be put into inventory but shipped and billed fully to the department that ordered it.

  2. Vendor/Customer Relationship: While this is a rather weak financial reason we felt that the vendor had a more vested interest in our company than other companies he worked with.
We also put together a team of people from both companies to work togetherto solve the other headaches that populate a contratual relationship.

As a result of our contract and long term relationship our vendor receivedthe benefit of our continued business and growing business that eventuallyincluded Docutech jobs, non-forms inventory management and fufillment work.

Did my vendor feel like he got the raw end? In the beginning, yes. Butafter 7 years of service he could honestly say that he was a better vendorto his other customers because of the relationship he had with me.

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Where can I get 10 customers just like you?

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Just a little advice from old days as a re for Duplex Products. We did alot of bill as released programs, but we were very upfront with theclients. We told them that there were no free lunches. That we had storage and ahndling costs built in as well as financing charges. For some that was fine because it didn't cause them large departmental charges at one time.

Be honest with these people, most realize you get something for nothing anther are financing charges, etc built into billl as relleased programs.Would a bank do this kind of financing for someone without interest, hellno!

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WOW, thats a new one...a customer wants you to BUY back HIS customforms, and then sell them back to him on a bill a shipped basis...I swearthe arrogance of the customers today far surpasses what I could fathom only a few short years ago.

The long and the short of it is simple...bill as shipped costs more thanbill on completion. Whether you bill a monthly storage and finance charge, or build it all into the original sell price, as others have already written..."there are no free lunches".

So when you ask your client exactly what price he expects you to"purchase these forms back at"...he should be reminded the financing isbetween 12-18% per year...that way he won't be offended when you pay him$85/M for goods he just payed you $100/M awhile ago....see if he still wants ya to do this, or if from this point on he will tell you BEFORE he orders that it will be a Bill as shipped order. If this buyer is at all familiar with the direct manufacturers "coming from a larger bank" as you mentioned, rest assured he is familiar with storage charges, per carton release charges, in/out charges, shipping charges, etc.

Back to this customer arrogace thing....I was taught, and stillbelieve, the customer is always right...even when they are wrong. It isreal evident to me that the level of customer arrogance dictates whathappens in our market. All too often I see our salesguys come back and tell me "the customer told me they are only going to pay $XX/M for theinvoices"....and with competition as fierce as it is, you're left to realize if you don't take care of the customer, someone else will. (And we walk away from plenty because it just is not worth it sometimes)

Anyway, as far as your "contract...we normally state a generalcontract period for each form that is entered into inventory. After thecontract time (say 1 year), if there is NO activity on the goods, ourcontract states we reserve the right to ship and bill the inventory.Freight, finance charges, storage charges, handling charges, in/out charges, DAMAGES, etc are all a few things to consider. You might want to check with DMIA, they might have a few samples of contracts from which your attorney can draft your specific one from if necessary. Truthfully, we have always written our own, in the plainest of English. The key is an understanding on both parts BEFORE anything is ordered or put into inventory, unfortunetly, you didn't have that luxury. Let us know how you make out, and good luck!

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