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How to Use Agreements to Forecast Sales

One of the most important elements of running a successful business is having the ability to accurately forecast sales. An accurate sales forecast enables companies to properly manage staffing and production needs and is an essential element to increasing the productivity of any sized business. A proper sales forecast can help a company identify any issues or opportunities that present themselves and enable a timely response. One of the simplest methods a company can use to help them properly forecast their upcoming sales numbers is the sale of goods agreement.

Pre-Planning for Production Capacity

The sale of goods agreement is a legally binding contract that is useful to both companies that buy goods and businesses that depend on selling those goods. The sale of goods agreement is an excellent tool that companies can use to track upcoming sales arrangements and implement the necessary production capacity to meet those sales goals.

The sale of goods agreement essentially locks a buyer into purchasing a certain amount of product within a certain timeframe. It clearly stipulates:

  • the items that are being sold,
  • the amount the buyer is paying for the items, and
  • the due date for the purchaser to take possession of the items.

This enables the selling company to properly plan their production capabilities around upcoming sales requirements as well as limiting production capacity during slower sales periods.

Securing Future Inventory Needs

The sale of goods agreement is also a useful tool for companies that need to forecast the purchasing of goods and equipment necessary to properly run their business. Often times it is financially prohibitive for companies to maintain large inventories of items needed to conduct business.

Purchasing large quantities of supplies all at once can strain a company’s bottom line and create issues of storage for smaller companies. The sale of goods agreement enables a company to lock in a set number of items to be purchased at a set price but enables that sale to occur at a date in the future. This guarantees that the company will be able to purchase the items that they need to operate in the future at a pre-negotiated price. This enables a company to purchase large quantities of material over time as they are projected to need it and eliminates having to maintain storage facilities to house a large amount of inventory.