Go for Cash

In India it pays to deal in cash (or cheque) rather than going in for trade credit facility. If you have a habit of making your purchases on credit you are not only paying bank interest, risk premium and margins for these banks (which are relatively very high in India) but you are also incurring additional tax burden!!!

Taxes like excise duty, sales tax etc. are determined on the basis of selling price of the goods. If you are making regular purchase on cash the supplier would be willing deduct these costs from the price of the goods. Although costs like interest cost is normal and there is opportunity cost for the fund you use, costs like extra tax liability etc. are additional and can be saved. Added to that paying in cash upfront wins you tremendous negotiation power and market credibility which help you attract the best suppliers.

Same is true when you are selling goods; try selling for cash you will be able to give a better deal to your customers in comparison to one who offers credit facility. This is the strategy being followed by Reliance group and that’s why they not only get best offer for the purchases but are also able to give one of the best offers to the customers.