Starting to offer 30 Day Terms

[mslodyczka]

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Hi All

Our business is going to start offering 30 Day terms to our wholesalers, what do we need to do to cover ourselves?

We’ve already had a proper Credit Application Form and Deed Of Guarantee Form drafted for wholesalers to sign.

Is it best practice to go through a credit check? If so, how?

What if they keep paying late, do we cut them off?

Cheers!

[Tact]

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Just from experience when dealing with these relationships, I’d consider putting items on consignment or retention of title so that you retain ownership. Not sure what kind of business you’re in but these are quite common. It would mean registering each agreement with the PPSR.

With regards to late payment, a lot of companies use carrot and stick methods. For example, giving a 2% discount to customers who pay within 7 days (it’s worth it to your cashflow and your cost of pursuing debtors) or a penalty for late payment. Ultimately, you want to retain the relationship so hardball isn’t a viable first option.

[mslodyczka]

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Thanks for the advice. We sell camping products primarily, portable water heaters, tents, that kind of thing. Not massive value stock. Good advice about the retention of title, I’ll look into that one.

We’ll be offering upfront payment discounts to encourage early payment.

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