How do I check a cabinet shop’s hardware and sheet goods supplier terms?

List the key suppliers for sheet goods, edge banding, hinges, slides and finishing materials. For each, collect the current price list, any special pricing and the last statements. Compare what the books say is owed with what the supplier says.

Ask whether credit is extended to the shop or backed by the owner’s personal guarantee. A new owner often has to apply fresh, and the supplier may tighten terms at first. Ask the owner to introduce you.

Find out how dependent the shop is on one supplier. Ask what happens to lead times or pricing if a supplier raises prices or runs short, and whether the shop has a backup. Review how purchases flow into the cost of goods and into what the shop owes. Your accountant can read the statements with you and flag items that do not add up. Ask how price changes are communicated and how quickly the shop passes them on to customers. A shop that locks in customer prices while supplier prices float carries a risk you should understand. Also ask whether there are minimum orders, freight charges or restocking fees that change the real cost. Keep copies of the agreements, because you will want to compare them against any terms offered to you after closing.

Key takeaways

• Collect credit terms, volume pricing and statements from each major supplier.
• Check whether credit rests on the shop or the owner personally.
• Meet key suppliers before closing and ask about a backup source.