Setting Payment Terms for Wholesale Customers (Net 7/14/30)

Payment terms are one of the quietest levers in a distribution business — and one of the most dangerous to get wrong. Too tight and you lose accounts to a competitor who's easier to buy from. Too loose and you're effectively financing other people's shops out of your own pocket, with the freight and product already gone. The right terms protect your cash flow without making you the hardest supplier to work with. Here's how to think about them.

There's no single "correct" term — there's the right term for a given account at a given moment. The skill is matching the term to the risk in front of you.

What Net 7, 14, and 30 actually cost you

"Net" is simply the number of days a customer has to pay after delivery. The longer the window, the more of your cash is tied up in product someone else already has. That gap is real money — it's working capital you can't use to buy your next inventory load.

Start tight, loosen with trust

The cleanest rule: new accounts pay on delivery or prepay, and earn longer terms by paying on time. This protects you when risk is highest — at the start, when you don't yet know if a shop pays reliably or survives its first year. Frame it as a path, not a wall: "We start everyone on delivery payment, and after a few months of smooth orders we open up Net 14." Owners respect that, because it's how they'd run it too.

Set a credit limit, not just a term

Terms answer when they pay. A credit limit answers how much you'll let ride before they catch up. A shop on Net 14 placing larger and larger orders can quietly build an exposure that wipes out your month if they fold. Cap the total outstanding per account, and don't ship beyond it until the balance comes down. The limit grows with their track record, the same as the term.

Put it in writing — every time

Verbal terms cause more disputes than late payers ever do. Before the first order, the account should have agreed, in writing, to the term, the limit, and what happens if a payment is late. Then make sure every invoice repeats the due date plainly. Most "late" payments aren't bad faith — they're an owner who genuinely forgot or never had the date in front of them.

Use terms as a tool, not a default

Terms can win business when used deliberately: a slightly better term for a customer who consolidates more of their buying with you, or who commits to a regular delivery day. Just make the trade explicit. The mistake is drifting into loose terms by accident — saying yes to "can we do Net 30?" account by account until half your cash is on the street and you don't even remember agreeing.

The goal: get paid and keep the account

Good terms are boring on purpose. The customer always knows when payment is due, you always know your exposure, and nobody's surprised. When terms are clear, written, and matched to trust, you collect reliably without ever feeling like the supplier who's a pain to buy from. That balance — protected cash and an easy relationship — is the whole job.

Written by the team at BobaSync — the platform boba shops use to order from their suppliers, built so distributors get paid on time and keep the accounts they earned.