I had always thought that a bookstore had to buy all the books it sells upfront. Apparently, sometimes the books are given before they are paid for and the then the publishers get their money after the sale, which is how Borders operates. Borders, the second largest bookstore in the US, has announced that its financial woes are forcing it to delay payments to its publishers.
Borders is delaying the payments to publishers in an attempt to get its finances under control. The news of the money problems and delayed payments reportedly sent Borders stock down 13%. Borders also notes that it can offer “no assurance that it will be successful in refinancing its senior credit facilities or restructuring its vendor financing arrangements.”
BBC News reports that Borders latest financial information showed that its losses had doubled in Q3. The issue that prompted the money woes is that the credit facility available to it was reduced after the value of its inventory fell. The company is seeking alternative financing at this time.