What wholesale payment terms mean, how net 30 and 2/10 net 30 work, when to offer credit to a new retailer, and what extending terms actually costs you.
In this article
A retailer you've never traded with places a €2,400 first order and asks for 60 days to pay. Say yes and you've financed their inventory with your own cash, on trust, for two months. Say no and you may have just lost the account to a competitor who said yes.
That decision comes up constantly in wholesale, and most brands make it case by case, in the moment, based on how the conversation felt. Payment terms deserve better than that. They're a commercial lever with a real cost, and treating them as a policy rather than a negotiation is what separates brands that grow their receivables under control from brands that grow themselves into a cashflow problem.
This guide covers what wholesale payment terms actually mean, how to read the notation buyers use, which terms fit which customers, what extending credit costs you in hard numbers, and how to reduce risk without turning every new retailer away.
What are wholesale payment terms?
Wholesale payment terms are the agreed conditions under which a retailer pays you: how long they have, what triggers the clock, and what happens if they pay early or late. They're part of your commercial agreement, alongside pricing, minimum order quantities, and delivery conditions.
Terms are not the same thing as payment methods. The method is how money moves — card, bank transfer, direct debit, iDEAL. The terms are when it has to move. A retailer can pay by bank transfer on net 30 or by card at checkout; those are two independent choices, and conflating them is why some brands think offering online payment means giving up terms. It doesn't.
The distinction that matters most is between prepayment and trade credit. Prepayment means you have the money before the goods leave. Trade credit means you've shipped goods and are now an unsecured creditor of a business you may not know well. Everything else in this article is about how to move a customer from the first to the second, deliberately, and at a pace that matches how much you trust them.
How to read payment terms notation
Buyers and accounting systems use a compact shorthand. It's worth being fluent in it, because ambiguity here turns into disputes later.
Notation | What it means |
|---|---|
Net 30 | Full payment due 30 days after the invoice date |
Net 60 / Net 90 | The same, with 60 or 90 days |
2/10 net 30 | 2% discount if paid within 10 days, otherwise full amount at 30 |
EOM 30 | 30 days from the end of the month the invoice falls in |
CIA / prepayment | Cash in advance — paid in full before dispatch |
CBS | Cash before shipment, in practice the same as CIA |
COD | Cash on delivery, paid when the goods arrive |
Two details cause most of the arguments. First, what starts the clock: invoice date, dispatch date, or delivery date. Say which one explicitly, because a buyer whose warehouse took nine days to book the delivery in will argue for the later one. Second, EOM terms are much longer than they look — an invoice dated the 2nd of the month on EOM 30 is effectively net 59.
Whatever you agree, it belongs in writing on the purchase order and repeated on the order confirmation and the invoice. Terms that only exist in an email thread are terms you'll struggle to enforce.
Which payment terms fit which customers
The most useful thing you can do is stop deciding per conversation and start deciding per customer tier. A simple policy handles 90% of cases and leaves you room to make exceptions consciously rather than under pressure.
Customer | Suggested terms | Why |
|---|---|---|
New account, first order | Prepayment or pay at checkout | No trading history to price the risk against |
New account, large first order | 50% deposit, balance before dispatch | Shares the exposure on an order you'd struggle to resell |
Established independent | Net 30, with a credit limit | Rewards a payment record without unlimited exposure |
Key account or chain | Net 30–60, often theirs not yours | Larger retailers usually impose standard terms |
Export / new market | Prepayment until established | Cross-border collection is slow and expensive |
Any account in arrears | Back to prepayment | Terms are earned, and can be withdrawn |
The principle underneath: terms are earned, not granted at signup. A new retailer prepays, builds a record over two or three clean orders, and then moves onto net 30 with a limit. That progression is easy to explain, it doesn't feel like distrust, and it means your receivables grow in step with your knowledge of who's paying.
What offering terms actually costs you
Trade credit is not free, and the cost is usually invisible because it never appears as a line item.
Start with working capital. If you turn over €500,000 a year on net 60, you have roughly €82,000 permanently tied up in unpaid invoices — money you've spent on stock and can't spend again. Moving that book from net 60 to net 30 releases about €41,000 in cash without selling a single extra unit. For most growing brands that is a bigger lever than any pricing change they could make.
Then there's the cost of early-payment discounts, which brands routinely underestimate. Offering 2/10 net 30 means giving up 2% to be paid 20 days sooner. Annualised, that's roughly 37% — far more expensive than almost any financing you could arrange. It can still be the right call when cash is tight or when a customer is a genuine payment risk, but make it deliberately, and price it into your margin structure rather than treating it as a courtesy.
And there's bad debt. A written-off €2,000 invoice at a 55% gross margin doesn't cost you €2,000 of profit — it costs the profit on roughly €3,600 of additional sales to replace it. One default can eat the contribution from several good accounts.
Reducing risk without losing the sale
The instinct when you've been burned is to tighten terms across the board. That costs you good customers. The better approach is to make credit decisions cheap and specific.
Check before you extend. For a first order above a threshold you set, look the business up — chamber of commerce registration, how long they've traded, whether the entity matches the shop name. A five-minute check catches the obvious problems. Credit reports are worth buying for larger exposures.
Set a limit, not just a term. Net 30 with a €3,000 ceiling is a very different risk from net 30 with no ceiling. The limit is what stops a good customer quietly becoming your largest exposure.
Use a proforma invoice for prepayment. It gives the buyer a formal document to pay against and to book internally, without creating a receivable on your side. It's the standard, unawkward way to say "payment first" to a new account.
Make paying immediately the easy path. A lot of small orders default to terms purely because there's no way to pay on the spot. When retailers order through a B2B portal with integrated payment at checkout, the customers who are happy to pay now simply do, and terms become something you extend to accounts that genuinely need them rather than everyone by default.
Retain title until paid. A retention of title clause in your terms and conditions means goods remain yours until the invoice clears. It won't solve every insolvency, but it's a clause that costs nothing to include and occasionally matters a great deal.
Chasing late payment without damaging the relationship
Most late payment isn't dishonesty. It's an invoice that went to the wrong inbox, a missing PO number, or a small retailer with a cashflow gap of their own. Treating every overdue invoice as a confrontation costs you accounts you'd have kept.
What works is being boringly systematic. Send a polite reminder a few days before the due date, not after. Follow up on day one past due, in writing, with the invoice attached again. Escalate on a fixed schedule rather than when frustration peaks. Make sure the invoice carries the buyer's PO number, because in larger organisations a missing reference is the single most common reason a payment never gets scheduled.
When an account goes properly overdue, the useful lever is usually the next order rather than the last invoice. Putting a customer back on prepayment until the balance clears is firmer than a chasing email and easier to say without an argument — it's policy, not a judgement about them.
Where payment terms live in your order flow
A terms policy that lives in someone's head is a policy that gets bypassed on a busy day. In practice, terms leak in the same few places every time: a rep agrees something different at a trade fair, a new customer is set up without a limit, an account in arrears places another order and nobody notices until the invoice is raised.
The fix is to hold terms against the customer record rather than the conversation. When each account carries its own terms, limit, and status, the right conditions apply automatically to every order regardless of who took it or where. That's the same argument as customer-specific pricing: rules enforced by the system, not by memory. If your customer data still lives in spreadsheets, this is one of the clearer reasons to move it.
Orderchamp Cloud handles this as part of the ordering environment rather than as an afterthought. Retailers order through a branded B2B Portal that shows their own pricing and assortment, integrated payments let customers pay at checkout where that's appropriate, and order management keeps every order, whatever channel it came from, in one place with the right customer attached. You can see how eight brands restructured this, or read more about what a full B2B e-commerce solution covers.
Getting terms right from the first order
Payment terms are one of the few commercial levers you control completely. Set them as a policy tiered by customer type, put them in writing on every document, let customers earn better terms through a payment record rather than a negotiation, and know what each concession costs before you make it.
Done that way, terms stop being a source of anxiety every time you win a new retailer and become what they should be: a normal part of how you sell.
Want payment terms applied automatically per customer? Explore Orderchamp Cloud or book a demo.
Frequently asked questions
What does net 30 mean in wholesale?
What does 2/10 net 30 mean?
Should I offer payment terms to a new wholesale customer?
What is a proforma invoice?
How do I reduce the risk of not being paid?