How do I check an apparel contractor’s trims and fabric inventory belongs to the shop?

Apparel contractors often hold goods that look like theirs but are not. Many customers send fabric, buttons and labels to be made up, and the shop is only a custodian. Ask for the inventory list and see whether it distinguishes owned stock from customer-supplied stock. If the books treat everything as an asset, an accountant should adjust the picture before you rely on it.

Trace a sample of items. Pick rolls and trim boxes on the shelf and ask for the matching supplier invoice or customer receiving slip. Look at labels, bins and tags, and note whether customer goods are kept apart. Ask how leftover material is handled after a job, since disputes often start there. Ask also how damaged or short-shipped goods were handled in the past. Keep notes on any open claims from customers.

Also ask whether any supplier has been paid, whether anyone holds a claim on the stock, and what happens to unfinished orders at closing. Your lawyer can check for liens and write the treatment of customer goods into the purchase agreement. A physical count on the closing date, with a representative of each large customer if possible, avoids arguments later.

Key takeaways

• Split the stock into shop-owned and customer-supplied before counting.
• Trace sample items back to invoices or receiving slips.
• Ask your lawyer to check for claims on the stock and set the closing-day count.