Prebooking Sales

dollar closeup big 200x200 Prebooking SalesThe practice of prebooking sales involves a business going out and contacting its regular customers and requesting that they purchase the inventory they are forecast to purchase in the next quarter now.

An example: Company A always buys 500 widgets from our sample business every quarter at a fixed cost of $5 per widget. In order to show boosted sales in Q4 of the year Company A is convinced to purchase 1000 widgets at $4 today, accept deliver of the first 500 now, and the second set of 500 during the following quarter.
The net effect of this over the short term is that our company has massively increased its sales- at least on paper. Over the long term though it has the opposite effect; unless Company A’s needs suddenly increase they are going to cancel their order in the following quarter.
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