[Hua11.com Original] Taking large floral orders is appealing, but in reality, there are many pitfalls to avoid. Especially at the end of the year, due to fiscal and tax policies, there are aspects we need to pay special attention to, which will directly affect your income.

Let's provide some brief reminders below. (Some of the following content refers to discussions in the Hua11.com student group.)

As mentioned in our Light Decoration Series articles (Reference: [Hua11.com · Light Decoration Series 2] The significance of Light Decoration to modern flower shops and floral studios), when undertaking large projects and orders, several factors require attention. One crucial consideration is that the payment collection cycle for large projects tends to be relatively long. This extended cycle directly impacts the cash flow of your flower shop.

Regardless of the enterprise's size, from large multinational companies to small self-employed individuals, most bankruptcies occur due to cash flow disruptions. Therefore, we must pay sufficient attention to this factor. (From this perspective, the capital risks faced by large and small companies are similar, although that's a separate topic.)

Why is the payment collection cycle for large projects and orders relatively long?

Usually, the Party A (the customer placing the order) in these projects consists of large companies. Managing large companies involves complexity, and the capital approval process is lengthy. In some cases, it even follows a chain of steps: "initiating the application by the project department -> approval by the department -> company approval -> group approval -> multinational headquarters approval -> and then feedback to the project department in reverse."

The longer the chain, the slower the approval speed. Consequently, if your funds are paid in installments (common for many large projects, often executed in three installments like 4:3:3 or 4:4:2), subsequent collections will be delayed significantly.

Collecting outstanding receivables can be a challenging and arduous process.

The following conversation in the student group is a true reflection of this situation (with a few modifications):

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Student A: Well, I had a cooperative order and received payment only after half a year.

Student B: [Facepalm] If you have the money, you can afford to wait. Large companies typically take either one week (for the fast ones) or 1 to 3 months (for the slow ones) to reimburse. Especially if accounts close at the end of the year and payment isn't settled before December 15th, it might extend to the end of January or even February. When signing a large order, it's crucial to agree on the final payment date and stipulate late payment penalties in the contract.

Student C: @Student B Yes, that's the reality. I vividly recall a year when we did business with a company in Beijing. On the evening of December 31st, I personally flew to Beijing Airport to deliver the invoice. My colleague picked it up at the airport and took a taxi directly to the other company. Meanwhile, I caught a return flight to Guangzhou because express delivery wasn't an option due to the late hour.

Student A: If there are so many complications and large companies can't guarantee timely payments, I won't accept such orders. Earlier this year, I received an order worth over 100,000 yuan on March 8th. However, 50,000 yuan was delayed for half a year before reimbursement. I felt too embarrassed to chase after it. [Facepalm]

Student B: Having people in the administrative and financial departments of the client company can save a lot of trouble. Fixed suppliers need financial strength. Some reimbursements occur quarterly, while others happen once every six months. So bosses should be proactive about year-end accounts.

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Indeed, these are the risks associated with taking on large orders. If you collaborate with third-party companies for a project, you'll encounter even more challenges. These third-party entities often demand immediate settlement and offer no credit. Essentially, the money you receive from Party A must be prioritized for these third-party payments—even if you haven't received it yet, you're expected to pay in advance.

Large projects may seem enticing, but if you can't maintain firm control over them, you face greater risks than anyone else. And it's particularly challenging at year-end.

Remember that flowers are perishable items. Once the project is complete, you can't reclaim them as depreciated fixed assets. Your investment becomes a loss if payment doesn't come through, and you can't recover valuable items as compensation. Even if some peripheral items can be returned, custom-made large projects often yield little usable material.

This is precisely why Hua11.com advocates for the light decoration project. It's a smart and comprehensive approach—a project that strikes a balance between "income," "workload," and "risk." (Reference: [Hua11.com · Light Decoration Series 1] What is Light Decoration? Why did Hua11.com put forward this new layout category concept?)

Everyone, please think carefully. I hope the above text provides some inspiration.

Copyright Statement:

This article is an original creation by Hua11.com and is included in the “How to Run a Flower Shop and Floral Studio” Ebook. The content of this article may be periodically updated and is initially published on the Hua11.com official website blog. You can find the article at this link: https://hua11.com/blog/4688.html.

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