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#1996751 - 02/18/15 10:26 PM What do you think, is cash activity reasonable?
BSAkpo Offline
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BSAkpo
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Apparently I'm on a roll with BSA questions this week. crazy

A food distributor with five locations in a few states on the east coast brings in between $5 and $7 million in cash every month. The majority of their clients are ethnic restaurants and mom/pop grocery stores. Your first reaction - does the cash activity appear consistent with this business type?
Thank you for your time.

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#1996778 - 02/19/15 02:18 AM Re: What do you think, is cash activity reasonable? BSAkpo
rlcarey Offline
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Galveston, TX
How would we know without looking at their financial statements or knowing more about what they do. Do some wholesalers in some areas deal in cash - the answer to that is yes. Cash comes in and cash goes out - where does it go??
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#1996804 - 02/19/15 02:01 PM Re: What do you think, is cash activity reasonable? BSAkpo
PrimeTime Offline
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In addition to what rlcarey stated, is it known whether or not a discount is given for customers that pay the distributor in cash? Many places offer a 5%, 10%, 15% etc for customers that pay in cash, ranging from the local gas station to a food wholesaler such as this. I'd say that in order to make your determination, more due diligence would be required. Does the customer have a website that you could browse to see if anything is stated? If not, consider giving the account manager a call to see if they know anything further about the business. If they don't, maybe it's time to call the customer directly.
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#1996805 - 02/19/15 02:02 PM Re: What do you think, is cash activity reasonable? BSAkpo
BSAkpo Offline
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BSAkpo
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Thank you for your response.

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#1997138 - 02/19/15 11:03 PM Re: What do you think, is cash activity reasonable? BSAkpo
CantBeShocked Offline
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Some distributors will require cash payments from locations who have written them bad checks to pay invoices. Therefore they will require cash only. However my experience has been small distributors who do not have millions in cash.....so not sure on this one.
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#1997281 - 02/20/15 04:47 PM Re: What do you think, is cash activity reasonable? BSAkpo
BSAkpo Offline
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BSAkpo
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This type of business is new to me. I figured there would be some cash since the majority of their clients are ethnic restaurants. But, the cash is 60% of their sales, which concerns me. Thanks again for responding.

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#1997546 - 02/23/15 04:27 PM Re: What do you think, is cash activity reasonable? BSAkpo
John Burnett Offline
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John Burnett
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Cape Cod
A thought -- find out whether the wholesaler offers an incentive for cash on delivery rather than payment by check or on trade terms. The merchandise is certainly not of a type that can be reasonably recovered in the event an account goes past due.
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