Intro+ question: Imported steel products

October 20, 2023

by a searcher from Wilfrid Laurier University in Toronto, ON, Canada

Hi everyone - my name is Muaaz. I’m a CPA in Toronto and I work in financial due diligence. Would be more than happy to provide proposals/quotes on tax/financial/HR diligence for target companies in Canada. I am interested in a search in the future. Thrilled to be here amongst so many talented individuals!

Question:
Does anyone have knowledge of importing terms? I am seeing a scenario where a light value added manufacturer/labeller imports goods on payment terms “payment on order” and the goods can take a 6-10 weeks to arrive. Resulting in quite high inventory balances and also very high DIO (200+). Would appreciate thoughts on this and how to go about determining what sort of margins would justify the long DIO and working cap tie up.

Reply by a searcher
from Concordia University in Toronto, ON, Canada

Hi Muaaz, in my experience direct imports of raw materials save at least one layer of distribution markup which depends on the volume, let's say 20-30%, that you need to consider in your analysis. An improvement could be importing more than just the single order based on a projected order volume, that has its own merits and risks of course.

Reply by a searcher
from Wilfrid Laurier University in Toronto, ON, Canada

Thanks Adel, appreciate the comment. I will think about this and the associated storage requirements

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