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Posted By: warshawlaw

It seems to me that most folks pay relatively fast (within 2-3 weeks of close) because they want their stuff, and most auction rules call for very fast payment, yet most auctioneers pay relatively slowly (45-60 days after close). Why? Two reasons come readily to mind:

(1) Administratively, it is a pain in the butt to run individual checks as money dribbles in instead of doing one big check run when the final payments are in and you close the book on the auction. It is much easier to keep track of things if you simply set a payment date and run everything to date at that time.

(2) If you hold the payments in an interest-bearing account until 60 days after the auction closes, you can skim the interest as an additional pure profit. Essentially, you get a 30-45 day interest-free loan from the consignors. While this isn't much on a per-consignor basis, think of it on the full auction: 30 days' interest on 5 million is over $4,000 per percentage point you earn.