cash flow and magazines

 

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One of the biggest problems newsagents have in managing magazines is cash flow– having to pay for all the magazines received when only half will sell and then carrying that debt until the magazines are recalled.

One way to manage cash flow and still have the chance  to sell magazines is to take advantage of delayed billing.

The publishers offer to delay billing for two or three months and hopefully the newsagents can sell the magazines in the meantime – thus resolving the cash flow problem for the newsagent.

Why then do some newsagents refuse to take these titles and early return them anyway? Why is this not a win? Selling the magazines before you pay for them is surely sound retailing.

I would love to hear your comments on delayed billing. Tell me more…

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25 thoughts on “cash flow and magazines

  1. If a magazine is not going to sell, it is no use holding on to it, even if it is on delayed billing.

    We are distribution only, and the cost required to manage magazines is horrendous, even worse if it is sent to a subagent which is unlikely to sell the title, and is likely to send it straight back themselves.

    If it were not for the profit on weekly magazines we would dump them completely, even so I am not sure that we are making money.

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  2. ************Once billed then return remaining copies in same month asap!!! So, you don’t get trapped..

    I placed the current issue of W.A. Weddings and Bride at the front of the shop – almost half of what was supplied, sold in less than two weeks (whole supply will be charged on the 20th of June 2014)

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  3. I’m all for delayed billing but put it on magazines that actually sell and don’t overload me. I keep a great range of magazines and often have comments about our range but you can still tell what is a dud and what is not. There is a difference between actual selling and hopeful selling.

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  4. I am a big fan of delayed billing and try to support it whenever possible. However this does not give me the capacity to stock 15 copies of a title I would not sell that many of if the billing was delayed for 2 years. Allocation still needs to be sensible, both in quantity and in the category of magazine.

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  5. Yes in some cases delayed billing is great. In Network Services arrangement you can’t get the credit until the month that it is charged out even if you do early return it so there’s little point. But what about when they send you crappy re-distributions on delayed billing that didn’t sell 1st time round so they send them out again with old price labels on them, dirty covers etc which make them un-saleable. You can’t sell them so you’ve got to store them until the month you get charged. If you send them back early with your other Supplementary returns then your return balance doesn’t match the amount on the statement. Sometimes delayed billing is just a pain in the neck.

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  6. Delayed billing, sale or return, early returns…all stacks up to one thing…not good enough to sell on normal commercial terms…. therefore Distributors need to offer some form of incentive in the hope that a Newsagent won’t stick it back in the trolley IMMEDIATELY!
    But thats what you should do…stick it back in the trolley because if you can’t sell most of it before the account is due to be paid then it ain’t paying its way in a retail store…not the fix some Newsagents believe it is!

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  7. The concept of delayed billing is fine. The problem is the titles where billing is delayed. Put delayed billing on the top 100 monthly’s and there is a good chance the magazines will be retained longer. It all gets back to volume and the cost of floor space. An example of destroying a newsagents cash-flow is providing them with football cards to sell over 5 months but expecting them to be paid in the first month. Love football cards with a passion, hate the need to pay up front rather than amortize over the selling period.

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  8. To answer your questions, I don’t know why newsagents refuse to take delayed billing titles and, yes, it is a win, but……. There can be a good reason for returning some of the delayed billing titles early.

    On the 17th of March I received 57 copies of WA Weddings and Brides. A magazine that is as thick as a brick and only five copies are shipped in a box. So we received 12 boxes in March with a delayed billing date of June and a return date in September. We have sold 6 in five weeks. I am currently storing 8 boxes which are taking up room I don’t have to spare. Even with delayed billing, now that I have seen how they are selling, six or seven boxes will need to be returned early. If I sell out after early returning some then I will order more in.

    While delayed billing helps with cash flow and is appreciated, storage room is also a consideration.

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  9. Delayed billing was once good when there was only a few doing it mainly just the Lovettes tittles now it seems magazines are always coming in delayed billing so at the end of the month it doesn’t really make much of a difference because all the tittles are just catching up with each other . Why do we (I) still early return ,well space is the main factor . My landlord does not give me delayed rent per square meter just because a magazine supplier figures they will not charge me for 3 months BUT want it on show the whole time . Every product in my Newsagency has to make money or I have no use for it ,so the way I work it is if it does not pay rent within a month or 2 it is sent packing .

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  10. Wow!! great responses – This is an issue close to newsagents’ hearts. It is something for publishers and distributors to take note of. It all comes down to fair and appropriate supply and an appreciation of the retail situation. When will they learn?!

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    • Some great comments and valid points. However there are some great magazine products which are released to newsagents, with extended billing offered as they can carry high retail prices – ultimately offering you a better dollar return per copy sold. There are many publications that are regular A4 size, mint copies and not oversupplied by the publisher or distributor, where the high retail price is the main driver to assist newsagents with cashflow. Although you may not sell as many units, you will most likely earn more revenue from the few you sell versus some of the vast range of titles you are processing through your tills. It is important to be familiar with the titles to ensure that you are not returning product too early and miss out on sales and revenue – particularly as the majority of the higher price titles being impulse purchase – similarly to your other non magazine product. If you don’t have it, you can’t sell it.

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      • The problem is Gabriel, unless distributors take responsibility for the total number of magazines supplied and refuse to accept inferior product, newsagents will continue to be overwhelmed and early return on mass. The good, responsible publishers are damaged by the system. Publishers who are prepared to work reasonably with the newsagents should advertise their brands and some icon should be marked on the delivery dockets to highlight sustainable publishers. This way the newsagents have a chance to pick out the best and return the rest.

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      • Gabriel, you might like to give us some examples of lines you are talking about. Extended credit is great if the product is going to sell and not be returned, and sell in a time frame that is not outstripped by the opportunity cost of having something in its place.
        Extended credit works for me with the Lovatts range for example. It also helps with volume stock like AFL collector cards and AWW diaries. But more often than not it is a cover for product that is not commercially viable in the first place.
        I would much rather see titles with a shelf life of more than 1 month be put on Sales Based Replenishment. Newsagents have fixed overheads and are paid on a variable bases for magazines, meaning we give you the real estate we pay for and in many cases we do not make a profit because the product has sat on the shelf for too long.
        Just accounting for Rent and outgoings a magazine pocket in my store has a fixed cost of $2.15 per week, or $8.61 per week retail. With Wedding magazines for example we often get extended credit of 3 months, but 200% of what we may sell. Often they are very thick and fit only one copy per pocket. Over the 13 weeks shelf life the break even retail is $111.93 per facing. Then add the cost of labour and processing and returns.
        The top 100 magazines used to hid the sins of the “cost of the tail”. Now that mags are everywhere we don’t sell anywhere near what we once used to, but still pay the price of oversupply on a very long tail, i.e. mags which sell 3 copies or less per issue.
        I have a simple rule with magazine cash flow. I hold the equivalent of 2 months sales on display at any one time. My magazine bill on a monthly basis must equal my cost of goods sold for the month. The only exceptions to this are when I can justify why I should increase my stock holding as in the examples above.
        I’ve done this now for the past 3 years and have no issues with magazines chocking the cash flow of my store.

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  11. When you receive a 28% increase (and invoiced) in magazine supply compared to the same month the previous year, delayed billing on some titles is not exactly something to focus on. The normal (?) management of magazine supply detracts from any benefit from delayed billing. Also, if delayed billing is a licence for the distributor to load up your magazine shelves with stock without any science behind any possible increase in sales then the process is not the best. We have had XchangeIT providing sales data for years now, but, no improvement in magazine efficiency rates or use by distributors. Also, very little stock is kept by the distributors now and it is very rare to be able to get additional copies of magazines as they have all been distributed. Very good for distributor cashflow as they invoice the majority of their stock and do not have to use their cash. The tool is there to improve the distribution process and we are paying for it but it is not being utilised.

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  12. Totally agree with these comments and we are working closely with publishers to ensure that all correct practices are enforced. Thank you for the great suggestion regarding identifying publishers already working as partners with our newsagents – totally on board with this and will investigate!

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  13. Delay billing is a great idea but normally the only mags that are db are obscure mags that normally will not sell anyway and just take up space except Lovatts xwords however we do not send any db mags back early as our only cash flow deterrent is the expensive overseas titles that have not been ordered and we keep getting despite no sales.

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    • Magazine supply does take some control. I utilise the early return feature of our Tower software to determine which magazines are being over-supplied relative to their selling history and the seasons of the year as we are a small tourist oriented newsagency on the Gold Coast. I usually do a walk around once a week to check for titles which have been on hand for close to two months and include these in early returns subject only to the characteristics of a particular title. I believe this approach helps with our cash flow – it is much better now than years ago as I have leaned the “ropes”. I have never tried to early return delayed billing titles (I always return in the same month they are billed) but I agree with most that many of these are slow sellers and are over supplied relative to their previous sales history. One of the biggest problems that we have is a finite number of pockets and trying to cope with the largest distributor constantly coming up with new titles, requiring us to then terminate another title!

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  14. Bill well said , can I also add the last few days of the month I do a report on how much stock has come in through the 2 suppliers in dollar value then I do a report on actual sales then finally I do my last returns for the month making sure I have made the correct amount of profit for the month without doing this I found I was always making a loss just following the actual return dates ,This method really doesn’t have anything to do with DB magazines but just the overall over supply of magazines itself .
    With regards to oversupply I think the ANF QNF and all other associations need to forget about every other problem and focus 100% on this before it is to late to fix up . I have been in the Newsagency industry for 7 years now and have not seen any change in over supply issues .

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    • Shaun, I understand your approach but even if you follow the actual return dates you do not make a loss as defined by accountants – you just have an increase in your working capital ie the amount of cash you have put into your stock on hand. And this is the main problem with the over-supply chestnut – increasing amounts of cash being tied up in increasing quantities of magazines on hand let alone the trials of endeavouring to store/display them1

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    • You have seen some change Shaun
      1. Network now allows you to change your supply without that ridiculous ‘average’ supply figure they used as a threshold
      2. IPS allows you to set your supply
      3. Network offers you the opportunity to set your supply on certain titles.
      Small progress I acknowledge but none the less progress and 3 things grossly under utilized by most, not all, newsagents.

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  15. I am impressed with the intelligent and considered approaches detailed here and will select and highlight some in the next NN to show how to properly manage magazines. That said, we still need to work on distributors to improve their systems.

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  16. We have no storeroom and, like everyone else our pockets are all full. There are new titles every week. This means if we decide to keep a new title, an old title must go back. The Delayed billing offer is irrelevant.We must decide what is displayed on whether it is likely to sell.

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