Building materials · Trading and distribution
Get paid by builders and keep the margin that freight and breakage take
A building-material dealer sells heavy, low-value goods to contractors and builders who pay on their own timetable. We cost each sale with the freight, unloading and breakage it carried, and track every manufacturer scheme and rate change. Credit to each builder and site is managed so the business is not financing other people's projects for free.
In one paragraph
Cement, steel, tiles, sanitaryware, plywood, paints and electricals are bulky, price-volatile goods, delivered to construction sites for customers who are often the slowest to pay. The dealers, stockists and distributors who sell them usually turn over ₹10–500 crore, split between retail counters and project supply. The owner or finance head carries the credit risk.
Owner or managing partner, often with the accountant who manages collections
The economics
How the money moves in this trade
A dealer buys from manufacturers on a rate that changes often, sometimes weekly for cement and steel, with quantity discounts, cash discounts for early payment and periodic schemes. Margin per unit is small, and freight, loading, unloading and breakage can consume much of it, especially on site deliveries in part loads. Tiles, sanitaryware and glass carry breakage risk at every handling, while steel carries cutting and weight variances.
Project customers buy in large quantities on credit and pay against their own billing cycles, often with deductions for short supply, damage or rate disputes. Retail counter sales are quicker but smaller. Stock sits across godowns and yards, sometimes at the customer's site, and goods move on e-way bills that must agree with invoices and stock records.
The problem
Where the numbers usually break down
Freight is not charged to the sale
Transport and unloading are booked as overhead, so small site deliveries look as profitable as full truckloads.
Builder receivables run past their terms
Project customers pay late and deduct without debit notes, and the deductions are written off rather than contested.
Cash discounts and schemes go unclaimed
Manufacturer cash discounts and turnover schemes depend on payment dates and targets, and eligible amounts are missed or reconstructed late.
Breakage is absorbed into cost
Broken tiles, sanitaryware and short weights are written off in bulk, with no record of where they occurred or who bears them.
Rate changes are not applied to stock
When the manufacturer's rate moves, stock and open orders are not revalued, so margin swings without explanation.
What we do
The work, and the result each part produces
Landed and delivered cost by sale
Purchase rate, inward freight, handling, outward freight and breakage attached to each sale or delivery.
Margin is known per delivery, not per month.
Builder and contractor credit control
Limits by customer and project, with ageing, deductions logged and disputed, and supply held when terms are breached.
Credit given to projects is bounded and recovered.
Manufacturer scheme and discount tracking
Cash discounts, quantity slabs and turnover schemes recorded when terms are met and reconciled to credit notes.
Every discount earned is received.
Breakage and variance recording
Breakage, short weight and cutting loss recorded by consignment, godown and transporter, with recoverable amounts claimed.
Handling loss has an owner and a cause.
Multi-godown stock and e-way reconciliation
Stock across godowns, yards and customer sites reconciled to the books and to e-way bills and invoices.
Stock and movement records agree.
Rate-change and margin reporting
Stock and open orders revalued on each rate change, with margin by product and customer reported weekly in busy periods.
Price moves are managed rather than discovered.
Where we start
The first steps of an engagement
Sales, freight bills and ledgers
We ask for the sales register by delivery, transport and unloading bills, customer ledgers with the deductions taken, manufacturer scheme letters and godown stock statements.
Delivered margin and project ageing
Recent deliveries are costed with inward and outward freight, handling and breakage, and builder receivables are aged by customer and project with deductions listed.
Credit limits by builder and project
Limits and terms are set for each customer and project, and supply is held under agreed rules when those terms are breached.
Margin and collections report
Margin per delivery after freight and breakage, receivables by project and age, and manufacturer discounts earned against discounts received.
How it is measured
The reports the work is judged on
Each is recorded as a baseline before the work starts, so later reports have an honest comparison.
- Margin per delivery after freight and breakage
- Builder and contractor receivables ageing by project
- Deductions raised by customers, contested and recovered
- Manufacturer schemes and discounts earned against received
- Breakage and variance by product, godown and transporter
- Stock by godown, reconciled to the books
Who it suits
Written for, and not the right fit for
- You manufacture building materials; the manufacturing hub fits better.
- You need debt recovery through legal proceedings; that is handled by an advocate.
- Dealers and distributors of cement, steel, tiles, sanitaryware, plywood, paints and electricals.
- Businesses with a significant share of sales to builders and contractors on credit.
- Dealers with several godowns or yards and their own delivery fleet.
Services
Services this work draws on
Costing and profitability
What each product, line and customer really contributes.
Explore service ↗Outsourced accounting
Your books kept current and reconciled, closed to a published calendar.
Explore service ↗Internal controls and risk
Controls sized to your business, documented and actually tested.
Explore service ↗GST, TDS and tax compliance
GST, TDS and income-tax prepared from reconciled data, not a working file.
Explore service ↗Every other service, also available in this trade
Common questions
Questions owners in this trade ask
We charge freight to the customer. Why cost it separately?
Because the freight you charge and the freight you pay rarely match, especially on part loads and repeat trips to the same site. Costing it per delivery shows where the difference is going.
How do you handle builders who deduct without explanation?
Every deduction is logged against the invoice with whatever reason the customer gives, and the ones without support are raised with the customer while the project is still live. Once a project closes, recovery gets much harder.
How do we track manufacturer schemes and cash discounts?
Scheme terms are recorded when they're announced, eligibility is tracked as you buy and pay, and the expected credit is compared with what the manufacturer issues.
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