On your first real wholesale order, the same question usually comes up: “Can I pay two months after delivery?” Saying yes opens the door to bigger volumes, but it also means you are financing someone else's stock from your own pocket. This guide explains how to build a clear credit policy for your argan oil brand and measure its impact before you sign.
Why do retailers ask for payment terms?
A retailer buys stock today that will sell over weeks or months, and doesn't want capital tied up in unsold shelves. Terms are therefore part of the deal, just like price. Large chains may impose their own standard terms, while small shops usually accept shorter ones. The professional answer is neither a flat refusal nor blind acceptance, but a considered offer.
Understand your cash gap first
The risk is not the term itself but the gap between what you pay out and what you collect. Add up the stages:
- production time at the manufacturer;
- shipping and customs clearance to your warehouse;
- delivery to the retailer and any inspection on their side;
- the payment term you grant.
The total is the number of days your money works without earning anything. If that exceeds what you can finance, the problem is the structure of the order, not the customer. To see what you actually spend before goods arrive, read our guide to the landed cost of argan oil.
Payment term options
| Option | What it means | Upside | Risk |
|---|---|---|---|
| Prepayment | Buyer pays before shipping | No credit risk | May deter new buyers |
| Deposit + balance on delivery | Part before shipping, rest on receipt | Good balance | Balance may be late |
| Short term after delivery | Full payment within an agreed period after invoice | Accepted by most buyers | Needs regular receivables follow-up |
| Long term | Matched to the buyer's stock turnover | Attracts chains and large distributors | Large cash gap |
| Consignment | Buyer pays as units sell | Eases shelf entry | Stock and its risk stay with you |
No option is right in every case. It depends on order size, track record and your margin. A practical rule: the less you know the buyer, the shorter the term or the larger the deposit.
Granting credit for the first time
1. Verify the counterparty
Ask for the trade registration, company details and any trade references, and confirm the shop or warehouse actually exists.
2. Start with a small credit limit
Set a ceiling on the buyer's total open balance, not per order. Start with an amount you could lose without harming operations, then raise it after regular payments.
3. Tie the next order to payment of the last
Don't ship a new batch while an overdue balance remains, and write this down from the start.
4. Put it in writing
State the due date, payment method, currency and the consequences of late payment in the quote or agreement. For the wider relationship with your distributor, see our article on exclusive versus open distribution.
Clauses to include
- When the term starts: invoice date or delivery date.
- Currency and the exchange rate used at payment.
- Early payment discount, an effective way to shorten the real term.
- Reminder and escalation steps.
- Retention of title until full payment; enforceability depends on the buyer's local law, so consult a local adviser.
- The right to pause new shipments when a balance is overdue.
Protecting cash without losing the sale
Middle paths exist: a deposit covering at least production cost, an order split into shipments each paid before the next, or a discount for immediate payment. You can also build the cost of credit into the price of long-term orders, transparently. Check that your unit price can absorb it by reviewing unit economics for beauty brands.
Receivables follow-up: a weekly habit
Keep a simple sheet: buyer, invoice number, amount, due date, status. Review it weekly, send a friendly reminder before the due date and a formal one after. A small delay ignored today becomes an entrenched debt months later.
FAQ
What payment term suits a first order from a new buyer?
There is no fixed number. Start with prepayment or a large deposit, then move to a short term after two or three orders paid on time.
Should I refuse a buyer who insists on a long term?
Not necessarily. Compare the requested term with your cash gap and offer alternatives such as staged shipments or a higher deposit.
Is a WhatsApp message enough to prove the agreement?
Better to record terms in a quote, invoice or signed agreement, and confirm any verbal deal in writing that the other party accepts.
What if the buyer pays late?
Send a written friendly reminder, pause shipments under the agreed clause, then escalate formally. Cross-border collection needs local legal advice.
In short
Credit drives growth when it is calculated and becomes a burden when it is given blindly. To align quantities and schedules with your cash position, request a quote from Assil Ouargane.
