Monday, August 29, 2011

How to maximize your Metals Recycling Business.

How to maximize your Metals Recycling Business.

Metals recycling project flow, all the way through refiner has become a critical component in the Pawn Industry.  The business has become more competitive and there is a “Gold fever” in every corner – more competition  to come.  Everyone is working on a smaller margin and the Gold Market is volatile.  Pawn Brokers have had a win fall in earnings while gold has gone up.  For those that have been around for a while,  it will/may go down as it did in the late 70’s.  Get ready to navigate and everyone needs to pay attention.

Turnover is critical and the faster is better if you are business that does not hold the gold for a rainy day.

1.      At the counter – accurate testing is becoming more critical because the margins are thinner.  You don’t have as much room.  The dollars a larger and you need to be accurate.  Measurement and accuracy at your counters need to managed and verified.  This is the greatest risk when you have employees and multiple stores.  You should deduct the actual weight of stones in Jewelry to accurately weigh the metals.

2.       While loans are in your safe in loan or a buy hold.  Periodic audits are good idea.  Although the way our business functions there is constant random audit going on.  A systematic audit is always a good idea and curtails internal shenanigans.

3.       When expirations occur and the envelopes are opened this is the 2nd area of internal control that need to be managed and controlled.  This needs to be done other than the originating employee.  This deters individual self-dealing and again shenanigans.  During this process the item get reviewed, sorted, and processed for recycling.  This process insures that process 1 is measured and deviation is managed.  When deviation is out of whack, you have something to pay attention too.

4.       When you have your batch ready, a total pre-melt assay should be calculated.  Today’s gold price.  And estimated total value before it is sent to the refiners.  You should also know what your carat of diamonds and colored goods are contained in batches for “Soak”.  A separate cost for Metals – Diamonds – and Colored Stones should be in hand and before the batch is sent to the refiner an estimated net profit calculated.  Then send to the refiner.

5.      Total weights should be verified and (pre-melt assay and refiner assay) should be compared and deviation measured each time.  There are many reasons for deviation and when one occurs it’s time to investigate and figure it out.  Diamonds and Colored stones is the biggest opportunity today!  I believe this is an area Pawnbrokers can really get good at in the future, liquidity channels, and creative businesses.  You should be receiving more carats than you are estimating at the counter.  The deviation of carats you are getting back should be measured and managed as well.

Pay attention to the market price you send your gold in on, and what the day’s gold price you get paid.  Agree with you refiner what market price you are getting paid by.  Remember you get hurt on down day’s and you win when the market goes up, you should keep very close track during this volatile times.

Good news, in Bravo this is completely automated, measured, and gives you insight each time you recycle your most valuable opportunity and profit channel.  Metals Diamonds and Colored Stones.

Good Luck,