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Many retailers who buy on Faire say 60-day payment terms are essential for their business. The reason is simple: Payment terms give retailers time to sell merchandise before the bill comes due—helping them maintain inventory levels and manage cash flow.
At sign-up, eligible retailers will see their spending limit for 60-day payment terms (in some cases, a credit application will be required for eligibility). By completing a credit application and linking a Faire account with Plaid, retailers can receive a significantly greater terms limit—helping them sell new merchandise or place larger orders of bestselling items.
Integrating Faire’s flexible payment terms into your workflow is simple, but don’t take our word for it. We’ve compiled testimonials from a host of retailers who’ve discovered the benefits of Faire’s payment terms for themselves and want to share their experiences with you.
Are you opening a new retail store?
If so, consider applying to Open with Faire, our exclusive program for new store owners. Open with Faire offers up to $20,000 in 60-day payment terms to use toward buying products on Faire. This way, new retailers can hold onto their cash for other expenses, like rent or payroll.
What are payment terms?
If you qualify for payment terms on Faire, your payment method won’t be charged until 60 days after you place an order (or 60 days after the ship date if fulfillment takes more than 14 days). Once you pay off an invoice, that amount is then returned to your total available payment terms, so you can continue to buy. Your available terms may also increase as your business evolves.
According to Indiana-based gift shop Silver in the City, payment terms give retailers “interest-free time to sell the merchandise,” which is especially useful during Faire Markets and when ramping up orders ahead of the holiday season. Irene Kesselman, owner of Ali Cat Toys, adds, “The point of terms is that you can sell your products before you pay.”
It gives those goods time to pay for themselves—by the time the bill is due, the goods have earned their keep.
Shannon Ritter, owner, Fleur De Lys
Some retailers worry that using 60-day payment terms will cause them to accrue more debt than they would otherwise, but shops that use terms on a regular basis see it differently. For example, the team at Costa Mesa, California, lifestyle boutique Fleur De Lys sees leveraging terms as a cash-flow strategy rather than accrued debt. “To me, terms are not debt,” says owner Shannon Ritter. “It gives those goods time to pay for themselves—by the time the bill is due, the goods have earned their keep.”
Ritter likes to think of every square inch of her retail store as a little city where each product needs to pay its rent. “When a new product moves into the building, it has 60 days to pay rent or it’s evicted,” she says. With payment terms, those products have ample time to pay for themselves before the invoice is due.
What are the benefits of payment terms?
When asked how payment terms benefit their business, Faire retailers are quick to offer superlatives. According to Mackenzi Farquer, owner of NYC home and gifts shop Lockwood, “terms are the secret sauce of Faire.” Annee Martin, owner of Ami Carmel, goes as far as to say “terms are a godsend.”
Three key benefits drive this sentiment:
1. Stock up ahead of busy seasons
Retailers on Faire often find that flexible payment terms are most critical ahead of times when customer demand spikes. “During the holiday season you need to have extra inventory on hand, and you need to have it early,” says Liz Adrian, director of retail at The Institute of Contemporary Art/Boston. As opposed to placing smaller, more frequent orders—which risk not having enough inventory during peak traffic periods—payment terms help retailers maintain cash flow while ramping up buying.
2. Find your next bestseller
Retailers also leverage this extra buying power to lower the risk that often comes with trying new brands and products. “Without terms, we would be less adventurous for sure. When we bring new products in, it can take longer to sell them,” says Jessica Woods, co-owner of Odd Provisions of Washington, DC. “Without terms, we’d be less comfortable with that.”
3. Buy with increased confidence and efficiency
Faire retailers say payment terms allow them to lean into bestsellers and order the backstock they expect they’ll need. That not only simplifies bookkeeping but also limits the logistical overhead necessary to intake new orders. And as Adrian points out, being able to place larger orders decreases the odds of under-serving your customers. “Let’s say you bought 42 items and sold all 42. If you’d bought 80, would you have sold 80? If I have more, I sell more.”
The unique benefits of using terms on Faire
While the benefits we mention above apply universally to payment-term programs, utilizing payment terms on Faire comes with a few additional benefits.
- Automatic credit card payments: Retailers don’t need to set tedious reminders to manually pay invoices, much less worry about missing a payment. This automated process also eliminates any risk that comes with sending credit card details to hundreds of individual vendors. “The more you can control who has your credit card information, the better,” says Kesselman.
- No need to route invoices through a bill payer. “Having Faire’s payment terms go straight to the credit card is one less thing I need to pay the bill payer to handle,” says Farquer. Naturally, that means more time to focus on customers and more money for the business.
- Continue tapping into credit card benefits. All payments through Faire go onto the same credit card, which means retailers can continue collecting miles/points on each order, with the benefit of additional interest-free days to pay the bill. (Many other vendors provide only 30 days, as opposed to the 60 days with Faire).
What’s the right payment terms limit?
Using payment terms responsibly is critical, and what’s best for your business likely depends on your approach to buying. Many retailers say it’s important to pay attention to how goods are selling and make adjustments going forward based on the sell-through rate. “I pay attention to what invoices are being paid and how much, if any, of that inventory we have remaining,” says Woods. “Then I make a mental note to slow down on that category or brand if there’s too much still on hand.”
Other store owners, such as Farquer, suggest setting a target amount of products sold (such as 50%) by the time an invoice is due.
A larger limit is room to grow if we need it.
Mackenzi Farquer, owner, Lockwood
Ultimately, most Faire retailers like having a much larger limit than what they expect to use. This ensures that retailers are ready to transition orders from larger relationships should a brand move onto the Faire platform. “I’m amazed by how many of my off-Faire vendors have come over,” says Martin. “Having slack in my terms limit is helpful to keep me prepared.”
Flexible payment terms on Faire also help protect against unforeseen circumstances and enable retailers to invest quickly in new growth areas. Martin says terms helped her business survive recent flooding and power outages. “I ended up with a lot of inventory, so terms ended up being essential for managing that,” she says.
The team at Lockwood used its excess terms for opening a new location. Linking its Faire account to Plaid enabled it to shift excess terms to its new store right away so it could fill the shelves with inventory in time for holiday traffic. “A larger limit is room to grow if we need it,” says Farquer, a sentiment shared across many retailers who love using flexible payment terms on Faire.
Tips for managing payment terms
If you begin incorporating payment terms into your buying strategy, keep the following quick tips in mind:
- Let sell-through inform your reorder strategy. Ask yourself: “Of the invoices I’m paying today, how much, if any, of that inventory is still unsold?”
- Set a limit on the amount of terms that you feel comfortable with and stick to it. For example, that might be utilizing no more than the equivalent of a month’s worth of sales.
- Switch to ACH payments if that’s better for your workflow. You can make this adjustment, and make ACH your default method for auto payments, at any time.
- Pay based on when it makes sense for you. Having up to 60 days to pay for goods doesn’t mean you have to use that full window of time. After all, once terms are paid, they funnel back into your available balance.
