Bulk buying and wholesale buying are very common in some industries. But there can be some financial risk, as a significant amount of money is tied up in a single order.
These practices are slightly different. With bulk buying, the goal is usually to get a lower price per unit by purchasing numerous units at once. Ordinarily, a single unit may cost $50, but a buyer who agrees to purchase in bulk may be able to buy 10,000 units for just $30 per unit. They can save a significant amount of money if they are willing to invest up front.
Wholesale buying is similar in that it involves large quantities. But it is a bit different because the buyer is typically making the purchase directly from the manufacturer. They then plan to sell smaller quantities to consumers or retailers. Wholesale companies can engage in bulk buying, but they do not always do so.
What if a client does not pay?
As a manufacturer, getting a bulk order or a wholesale order may feel very positive when the deal is coming together. It can take time to produce substantial revenue just selling single units at a time, but a bulk purchase can provide an influx of cash.
Unless that money is collected upfront, though, there is also a risk. If a bulk order is delivered, but then the buyer never fulfills their obligations under the contract and fails to make the required payment, the company is in a very difficult position. Not only does the manufacturer not have the cash flow that they expected, but they have also sold off a substantial part of their inventory and need to be paid so that they can continue operations and replenish that inventory. They may not have enough products left to sell until this process is complete.
As a result, it is very important for businesses that are owed money on bulk orders to know exactly what options they have if the client does not pay. Collection processes can be complex, and it may help to work with an experienced attorney.