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Wholesale Basics: Understanding Net Payment Terms and Why They Matter

July 13, 2021 | Published by Faire

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Do you have a line of high quality products that you want to sell in retail stores? You’ve come to the right place! Welcome to Wholesale Basics, a series for brands, makers, and artists who are interested in selling to retailers. Be sure to check out our previous post, which covers pricing and catalog basics.

Now, in our second installment of Wholesale Basics, we’re explaining what it means to offer net payment terms to retailers and how this can help grow your business. Keep reading to learn more!

What are payment terms?

Payment terms are the purchasing conditions that retailers receive when they buy wholesale. Some payment terms, called net terms, allow retailers to buy now and pay later. The terms outline how long a retailer has until payment is due, as well as how much they can spend.

For example, at Faire we offer retailers net 60 payment terms. This means buyers can stock up on products from brands and pay us 60 days later. Much like a credit card, a retailer’s net 60 terms limit is impacted by different factors including payment history, business size, and financial information.

Why do net terms increase sales for brands?

Net terms allow retailers to start selling through inventory before paying for it. This is a major advantage for independent retailers—cash flow is often the most challenging problem that small business owners face. When retailers have access to net terms, they can stock up even if they don’t have cash on hand.

As a result, retailers can place larger, more frequent orders with confidence—which means more sales for you!

How can brands offer payment terms?

It may seem risky to ship orders before receiving payment. Many brands aren’t able to offer net terms due to this risk, in addition to their own cash flow requirements. That’s why it’s important to find a partner who can assume the risk for you. At Faire, we offer retailers net terms on your behalf, at no added cost to you.

We work directly with each retailer who buys from you to handle term limits, invoicing, and payment collection. Your payment is guaranteed after every order—either 30 days later or, for a small fee, the next day—regardless of when retailers pay us. Faire takes on this risk so you can focus on what you do best—making your products and growing your business.

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