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New brands with under 50 accounts should start with prepay or 50% deposit terms to protect cash flow, then offer Net 30 selectively to proven accounts after the first reorder. Net 30 sounds standard, but it creates a 60 to 90 day cash gap that most early-stage brands cannot afford without external funding or stockouts.
Net 30 means the retailer pays 30 days after you ship the order. If you manufacture on a 45-day lead time and the retailer takes the full 30 days to pay, you wait 75 days from placing your production order to receiving payment. If you need to reorder inventory before that payment arrives, you are funding two production runs at once.
Example: You receive a $2,000 wholesale order. Your cost of goods is $800. You place the production order and pay your manufacturer $800 up front or within 15 days. You ship 45 days later. The retailer pays 30 days after that. You wait 75 days to recover your $800, and you still need another $800 to start the next production run before that payment clears.
Brands that offer Net 30 from day one either carry enough inventory to cover 90 days of demand, raise working capital, or run out of stock waiting for payments. Most brands with under 50 accounts do not have the cash buffer to do this safely.
Prepay means the retailer pays before you ship. This eliminates the cash gap. You receive payment, place your production order, and ship when inventory arrives. Your working capital stays intact.
The tradeoff is that many established retailers expect Net 30 and will not order on prepay terms. Prepay works best with newer retailers, online shops, and buyers placing small test orders who understand that emerging brands need payment security.
Prepay also works when you sell through wholesale marketplaces like Faire, which collect payment up front and release it to you when the order ships. Retailers on these platforms expect prepay or short terms because the marketplace handles the transaction.
If you use prepay terms, state them clearly on your line sheet and in your wholesale ordering portal. Do not surprise a buyer with a payment request after they submit an order.
A 50% deposit model asks the retailer to pay half up front and half on delivery or Net 15 after shipment. This reduces your cash gap without requiring full prepayment.
Example: A retailer places a $2,000 order. You collect $1,000 up front. Your cost of goods is $800. You use the $1,000 deposit to cover production and have $200 left over. You ship the order and invoice the remaining $1,000 on Net 15. You wait 15 days instead of 30 for final payment, and you never funded the full production cost out of pocket.
This model works well for brands with 10 to 50 accounts. It gives retailers some flexibility while keeping your working capital healthy. Retailers who balk at prepay will often accept a deposit, especially if they are placing their first order and you frame it as standard for new accounts.
The deposit also reduces the risk of cancellations. A retailer who has paid 50% up front is far less likely to walk away from the order.
Offer Net 30 selectively after a retailer completes their first order and reorders. The first order proves they will actually sell your product and pay on time. The reorder proves they are a repeat customer worth extending terms to.
Before offering Net 30, confirm you can cover the cash gap. Run this simple test: calculate how much cash you need to produce and ship one full production run. If you can afford to wait 75 days to recover that amount, you can safely offer Net 30 to that account. If not, stick with deposits or prepay.
You can also tier your terms by order size. Offer Net 30 only on orders above a certain dollar threshold where the margin justifies the cash gap. Smaller orders stay on prepay or deposit terms. This protects your cash flow on low-margin orders while giving larger accounts the flexibility they expect.
Some brands offer Net 30 only to accounts that hit a minimum annual purchase volume, such as $5,000 or $10,000 per year. This ensures you are extending terms to customers who generate enough revenue to justify the working capital risk.
Prepay terms will cost you some accounts. Established retailers with strong credit expect Net 30 and may not order if you require prepayment. Newer retailers and online shops are more flexible.
Deposit terms rarely lose you an account. Most buyers understand that a 50% deposit is reasonable for a new supplier relationship. If a buyer refuses a deposit, they are either overextended or not serious about the order.
Net 30 terms do not guarantee you will win more accounts. Retailers care more about product quality, pricing, and minimum order quantities than payment terms. Offering Net 30 from day one does not make a weak product more appealing. It just increases your cash flow risk.
The accounts you lose by requiring prepay or deposits are usually not the accounts that would have become strong repeat customers. Retailers who cannot afford a 50% deposit are often undercapitalized and may not reorder or pay on time even if you extend terms.
The payment term analysis in this article is based on cash flow math for brands with under 50 wholesale accounts, typical production lead times of 30 to 60 days, and cost of goods between 35% and 45% of wholesale price. The worked examples use hypothetical order values and production costs to illustrate the cash timing in each scenario. No client data or market statistics are included.
Begin with 50% deposit terms for all new accounts. After the first successful order and payment, offer Net 30 to accounts that reorder and meet your volume or order size threshold. This protects your working capital during the riskiest phase while giving proven customers the terms they expect as the relationship matures.
State your payment terms clearly on every line sheet, in your ordering portal, and in your outreach. Do not negotiate terms on a case-by-case basis unless the account is large enough to justify custom treatment. Consistency protects your cash flow and sets clear expectations with every buyer.
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