How do I check a furniture store’s interior designer referral accounts?

Designer accounts can be some of the best customers a furniture store has, because they bring repeat projects. They can also be the most fragile, since they depend on trust, trade pricing and quick service. Ask how each account was won and what keeps it.

Request the ledger for these accounts. Look at what each designer buys, how often, and how promptly they pay. Compare their balances to what the store owes on their special orders, and ask how long any dispute has been open. A long list of overdue balances suggests a looser relationship than the seller describes.

Ask about the terms. Are discounts a standard tier, or negotiated one by one? Are commissions paid on each sale? Are there deposits held on custom work? Check for unusual promises that a new owner would inherit. Ask whether the seller can introduce you, and when. Your accountant can review the receivables and payables behind these accounts for you. Ask, too, whether designers see the store as their only source or one of several. A designer who also buys elsewhere may leave over a small change in service, while one who relies on the store for custom work tends to stay longer.

Key takeaways

• Get a list of designer accounts with buying history, discounts and commissions.
• Review their balances and payment habits, and check deposits held on custom work.
• Ask for introductions at the right moment, and note any unusual promises you would inherit.