B2B · B2B product

Cash On Delivery or Make them pay upfront?

James Pagni Owner at CeramicSmokeware.com

Last updated on January 30th, 2017

Some shops placing larger wholesale orders will ask to send me a check once they receive the products. Should I keep allowing this method of payment for new buyers even though I am a small company who can't afford a loss? Should I say you have to pay before I ship it to you? Are there any basic guidelines on what to do in this situation? Should I include this in the terms and conditions I present buyers with when they sign their invoice? Any advice is welcome, Thanks James

Hugh Proctor Founder of LayrCake Low-Code Software Outsourcing

January 30th, 2017

Hi James,

I maybe right or wrong on this but.. it's it true that:

Wholesale orders send checks later because the purchase order tends to go through a process involving various people e.g. the buyer or purchaser, then the accountant who processes payment. The only reason you'd allow a late or deferred payment is due to their company size and high guarantee that you'll receive payment. They also do massive bulk payments to various clients, so consolidating the payments is more efficient for them.

Definitely for smaller and new buyers you should force them to pay upfront.

They then can request a line of 'Credit' when they have proven their trustworthiness, as there is nothing worse that having to deal with late payment, no payment or return of goods, etc. And forget suing, this could take months and a lot of your personal time and headaches.

Fact is, demand and supply: if they want it then they must buy it.

If the purchase price is high then you can try to do some sort of split payment but this is usually reserved for service based purchases and not upon product based.

So, upfront always.

Dane Madsen Organizational and Operational Strategy Consultant

January 31st, 2017

This depends on the size of the order and your relationship with them. If it is a great relationship. then offering terms is not unusual. You can also ask them to produce financials (or do a credit check at D & B) to get a sense for their payment habits.

Ib Warnerbring Co-founder, UI/UX designer, full-stack developer

February 3rd, 2017

You should never ship products without having received *some* payment. My wife runs a business selling dog products to wholesalers and she asks for 50% up front (before work even begins), and then the final 50% on delivery.

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