You are a business owner, who bought 100 cars from Honda Finance (cars that had been returned after the leases ended.)
The cost was $500,000, to be paid in 30 days. When the cars arrived, some were in better condition than others. You sold 25 right away, for $10,000 each. Just to be safe, you sent the payments directly to Honda, even thought the whole sum was not yet due.
The remaining cars were a hard sell but sold for $7500 each, and at the end of the month, you were left with 50 cars and the payment to Honda was due, as well as your rent, salaries, overhead etc.
In desperation, you sell the remaining 50 cars to another lot at a price of $4000 each. The price discount was based upon the purchaser’s agreement to pay in cash upon delivery. When the driver returns after delivering the cars, instead of cash he hands you a check from the other dealer……..
1. If the check clears, how much did you profit or lose in the transaction?
2. What action would you take now if the purchaser of the cars refused to pay with cash or a certified check, the regular check is the only payment available. What risks have you taken and what can the ramifications be?