How do I judge a bookstore’s returns arrangements with its publishers and distributors?
Ask for the actual terms with each publisher and distributor: what can be returned, by when, in what condition and how credit is given. Then check the books themselves. Shops that return poorly or hold stock past the return window carry hidden cost, and a buyer should know how much unsold stock can still go back.
Return terms decide how much risk a bookstore carries on what it orders. Ask the seller for each supplier’s terms in writing, and for a summary of which ones allow returns, which do not and which have conditions. Some suppliers give full credit, others charge for returns, and some set strict windows. Terms that are not written down are easy to dispute later.
Next, look at the stock on hand. Ask how much of it can still be returned, how much is past its window and how much is unsellable. Check whether returns are processed on a regular schedule or only when cash is tight. A shelf of old titles that can no longer go back is a sign that ordering has been loose.
Then look at the accounts with each supplier. Ask for statements showing credits owed, pending returns and anything disputed. Find out whether the arrangements stay with the business after a sale, or whether suppliers will want to reopen terms with a new owner. Your accountant can read the statements with you. Think about timing as well. A shop that places large orders ahead of a busy period and returns what is left afterwards may carry more cost than it shows. Ask how the seller decides what to order and when, and how often the plan has gone wrong.
Key takeaways
- Get return terms in writing for each supplier.
- Check how much stock can still go back and how much cannot.
- Read supplier statements for credits owed and disputes, and ask whether terms survive a sale.
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Sources
This answer is checked against primary sources. Links were last confirmed on the dates shown.
- 01Business Development Bank of CanadaGovernmentWhat is inventory
- 02Business Development Bank of CanadaGovernmentHow to conduct due diligence when buying a business
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