# Retailer has terms of Net60?



## BiscuitsNHoney (Mar 15, 2009)

I recently touched based with a big retailer to get some general questions answered. I did not give them any of my info or anything...I just wanted an understanding. The buyer told me that "OUR TERMS ARE NET60". What does this mean? Does it mean that they will pay me 60 days AFTER they receive my merchandise or what? Also, is it weird that THEY can set the terms and not me?


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## purplepills (Apr 19, 2009)

Basically you will be paid 60 days after goods received or service rendered. I heard of net30 but net60 is a bit extreme IMO.


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## loftgolf (Apr 17, 2008)

Yeah, usually when they want to pay in 60 days they call it Net 30!


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## RainbowGirl (Apr 19, 2009)

It's not too weird for them to set terms, since they are big like you said. If they have plenty of people/companies wanting to work with/for them, they can do what they want. Yes, it's usually net 30. I believe I have seen net 90 and up sometimes.


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## andycasy (Mar 5, 2009)

I get many clients that think they set the terms. Unfortunately, many of them will just go to whomever will give them the payment terms they want.

I'd be sure to charge extra for the inconvenience they are placing on you.


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## novanutcase (Aug 6, 2008)

Net 60 is not unheard of but, yes, it is a long time. Keep in mind that there are many other issues that you need to know about not just the 60 day terms. If they are big sometimes they will ask for markdown money, ad money, warehousing discounts, etc. Also, find out if you need to be EDI compliant to work them. If you aren't then they will tack on another charge.

As you can see all of these will eat into your profits.

You may want to start looking into getting a factor involved if you are going to be dealing with bigger companies.

John


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## selzler (Apr 4, 2007)

I have a store that I supply with product and they now have gone to net 180 or they just turn you away. They told me that there are so many printers that want them to sell there product that this is the way they are going from now on.


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## BiscuitsNHoney (Mar 15, 2009)

Well, with them being a big retailer, do you think that their accounts payable will be more professional and get me my money in a timely fashion? My aunt supplies sundresses, blouses,etc for a similar company and they usually order in large quantities in between 3,000-5,000 items. That would be ALOT of money if they wanted a similar amount to invest and not get paid for it.


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## Binary01 (Jun 2, 2007)

screw that..... if they order..then they should pay and wait...... tooo many people can get burned with net30/60/etc....


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## Solmu (Aug 15, 2005)

BiscuitsNHoney said:


> Well, with them being a big retailer, do you think that their accounts payable will be more professional and get me my money in a timely fashion?


No, I don't. I don't deal with anyone that big, but everything I've heard and experienced is that the larger the company, the longer they take.

Basically the larger the company the more they think they can do whatever they want and anyone smaller than them just has to put up with it. "You need us more than we need you" and all that.


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## novanutcase (Aug 6, 2008)

BiscuitsNHoney said:


> Well, with them being a big retailer, do you think that their accounts payable will be more professional and get me my money in a timely fashion? My aunt supplies sundresses, blouses,etc for a similar company and they usually order in large quantities in between 3,000-5,000 items. That would be ALOT of money if they wanted a similar amount to invest and not get paid for it.


Unfortunately in this day and age, retailers, especially big ones, want to use your money to finance their business and with a lot more of the big boy manufacturers willing to give terms to the big box stores to turn their inventories it makes it just that much harder for you to get paid on time. 
Will they pay you on time? I doubt it. Especially if you're dealing with the Federated Group which are notorious for not paying their vendors on time if at all. I've heard many horror stories from friends of mine that have dealt with them but then again I have a few that love working with them. I guess it depends on the situation and how well your product sells(read how important you are on the food chain to them).
Since you're starting out I highly doubt that they would commit to that many units in the beginning. More than likely they'll do a flagship store buy and order around 600 units. They'll do that for around 4 or 5 orders until their comfortable with the fact that sell through is good and you can deliver on time. After that they may do an all store buy and order around 2400 units, etc.

John


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## Girlzndollz (Oct 3, 2007)

BiscuitsNHoney said:


> Does it mean that they will pay me 60 days AFTER they receive my merchandise or what?


In a classic accounting sense, that would mean they would pay you within 60 days of the "invoice date". But it doesn't sound like they mean 60 days of the invoice date *or* receipt date. Sorry to hear. Best wishes.


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## txshirts (Jan 11, 2009)

Girlzndollz said:


> In a classic accounting sense, that would mean they would pay you within 60 days of the "invoice date". But it doesn't sound like they mean 60 days of the invoice date *or* receipt date. Sorry to hear. Best wishes.


They are offering to buy at that term of sale. You can accept, reject, or counter.

I personally would quote them Net60, Net30/2, Net10/3 and build the cost into the net 60.

This means that if you sell them $1000 they pay you Net 60 (60 ish days from invoice date)
If they pay you in 30 days they deduct 2%
if they pay you in 10 days they deduct 3%.

Add 15 days to the numbers for a realistic goal of when you should be paid by to account for holidays, delays, approvals, and check run dates.

Many companies will pay discounts early.... so it's just a matter of when you want to be paid and how bad you want to make the sale.

Your product has to have sell through and markup to have value to them.

This of course is just the financial side, you have to comply with all their terms still such as EDI, floor-ready merch, tagging, UPCs, etc. You might ask for a vendor checklist to make sure you can or want to comply with all their requirements. 

the alternative is to sell to smaller customers who have less risk.

Net 90+ is also called net never. GM and Chrysler are on Net never right now. You will probably not get paid if you sell them anything..... and if you sell something to one of their key suppliers you run the same risk.

I prefer to sell to credit card customers and let someone else take the risk of non-payment. Cash flow problems will kill you in a hurry, especially in this economy.


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## PositiveDave (Dec 1, 2008)

net30 usually means at the end of the month following so items invoiced on Jan 1st & 30th both get paid at the end of Feb. That tends to be the end of March...


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## gmille39 (Oct 18, 2006)

It means they will pay the full balance 60 days after they receive an invoice, and no, it's not wierd that they will tell you how they will pay. There's a reason why they are the big retailer. You are just a little vendor in a pool of many other little vendors.


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## gmille39 (Oct 18, 2006)

purplepills said:


> Basically you will be paid 60 days after goods received or service rendered. I heard of net30 but net60 is a bit extreme IMO.


Net 60 is becoming more the norm and net 30 gets laughed at in most industries. Especially with this economy, all companies are pushing out terms. In Europe, 90 and 120 days is more the norm. On the East Coast 90 days is typical. 
Maybe if you offer a cash discount you can get them to pay sooner.


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## gmille39 (Oct 18, 2006)

PositiveDave said:


> net30 usually means at the end of the month following so items invoiced on Jan 1st & 30th both get paid at the end of Feb. That tends to be the end of March...


No, those would be prox terms. Net 30 means just that. They will pay you the net amount in 30 days. Prox 10th, 25th and so on means that anything purchased in January would be paid by the 10th of the following month, or the 25th of the following month. Many companies cut checks on the 10th and 25th. Some cut weekly but nowadays they are cutting less times per month to save money.


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## Girlzndollz (Oct 3, 2007)

Agree with Greg. Net 60 means 60 days from invoice date, net30 = 30 days from invoice date. Yes, net10/2 is paid within 10 days of invoice date, deduct 2%.

Of course, whichever way an industry wants to 'stray' from the true intent behind the definition of the accounting terms, they will -- and if most are following the same stray path, that becomes the norm for the industry. 

But, to explain "what" those terms mean, these are the true meanings behind them. Like Greg also explained.


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## Solmu (Aug 15, 2005)

Girlzndollz said:


> Net 60 means 60 days from invoice date, net30 = 30 days from invoice date. Yes, net10/2 is paid within 10 days of invoice date, deduct 2%.
> 
> Of course, whichever way an industry wants to 'stray' from the true intent behind the definition of the accounting terms, they will -- and if most are following the same stray path, that becomes the norm for the industry.


Exactly true on norms; and unfortunately the norm for very large retailers is to more or less ignore stated terms.

From what I've read, it's not uncommon to take the biggest discount and the longest time; if you list net10/3 net20/2 net60 then they'll pay net60/3... or net90/3, or [net120/3 minus whatever discounts they feel entitled to]

And sure they're in arrears, but good luck chasing up 3-8% of an otherwise paid bill.

(not as likely with small business at least; it's more of a corporate arrogance thing)


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## Girlzndollz (Oct 3, 2007)

Yep, and you can't get blood from a stone, which is another reason some companies do that, no matter what industry they are in. I don't miss working A/P and A/R, that is for sure.


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