The questions independent drinks founders ask most — answered. Distilled from years of community knowledge so the good stuff never disappears in the feed again.
Moving to 60-day payment terms offers improved cash flow and peace of mind, but can reduce your leverage for volume discounts and working capital optimization. The choice depends heavily on your stock turn rate and order growth. **Pros of 60-day terms:** - **Cash flow protection** — No upfront payment means money stays in your bank longer, reducing immediate pressure. - **Risk mitigation** — If product arrives defective or fails to dispatch, you haven't yet sent cash across; you can negotiate from a position of having funds rather than requesting refunds. - **Generally working well in practice** — Members report that moving to 60-day terms is working well for cash flow as long as stock moves within a couple of months. **Pros of keeping 50/50 split terms:** - **Volume discounts** — Larger orders (with payment secured upfront) unlock better per-unit pricing and freight costs. - **Superior working capital** — You can place large orders and only pay the remaining 50% once you've sold through the stock, maximizing working capital efficiency. - **Best fit if growing order-to-order** — Members recommend this route specifically if you're scaling order sizes as you grow. **Key caveats:** - The "insurance" aspect of payment terms is secondary to your trade contract, which should specify who bears responsibility for quality and dispatch failures regardless of payment schedule. - 60-day terms work best if your stock turns within a couple of months; slower-moving inventory can extend your cash conversion cycle dangerously. - If you already have duty deferment in place (e.g., stock bonded at a location), this reduces the urgency to optimize payment timing. The decision should be driven by your specific growth trajectory and inventory velocity rather than payment terms alone.