Forums: Discussions for entrepreneurs and small business.

Hi Everyone! So nice to be here.

Hi Eva,

First, net 30 and net 60 are common payment terms.  Here are some ideas though that might help.  For new customers without an established credit line with a manufacturer, manufacturers often require the bill be paid in full before product ships (this is also very common).  As you said, you could also require a deposit up front.  Or, you could offer net 15 (day payment period) with a 2% to 10% discount for early payment.  Many companies pay early to get the discount.  But, make sure your pricing structure is set high enough to accommodate this discount.  Finally, don`t forget that you can send these big vendors a counter offer to their contract.  If they really want your product, they will negotiate a better deal.

Hope this helps


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The older we get, the more excuses we make for not chasing after our dreams. But truth is, goals are attainable at any age.

Great and thank you! That information is very helpful.
Eva

I disagree with terms. A lot of companies use terms as a way to save money.  They can cut all the checks for the month`s invoices at once.  It`s a good idea in theory except, as the economy has proved, many companies live on credit.  What happens if the item/service they were planning on selling in that time period doesn`t happen and they don`t have the capital to pay? Going to put them into collections?  Now you have created more work for yourself.  If you are not comfortable accepting terms I would try to take the payment up front and simply explain that you don`t offer terms because of the unwanted expenses it creates  Just a thought.  

Hi TurnTwo,

Having dealt with the accounts receivable end of a business, I must disagree.  Most companies look for a way to save money on invoices they owe money on.  Excepting payment terms with a discount built in is very common in business.  And, while there are all kinds of doomsday sayers out there, the truth is most companies are current in their payments.  You just don`t here about these companies because their not news worthy.  Doom and gloom is what sells newspapers, magazines and broadcast news.



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The older we get, the more excuses we make for not chasing after our dreams. But truth is, goals are attainable at any age.

Hi nevadascul,

I understand why companies have terms and that yes, most do pay on time.  However, you are still creating work for yourself when these companies do not pay on time.  Now you (or someone you pay) has to follow up with this company to receive payment, effectively lowering your profit margin on their payment.  Additionally, if a company needs Net 30 why not just use a corporate credit card?  They will have a month to pay it off before interest accrues and don`t have to waste time negotiating terms with another company and save money by making payments to one source rather than many.

I just believe that accepting terms is an unnecessary business risk.  Have I accepted terms in the past? Yes, but I do so very sparingly and only under very certain circumstances.  If you can get payment up front, I find this the most effective way to go. 

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The older we get, the more excuses we make for not chasing after our dreams. But truth is, goals are attainable at any age.