Fast-Track Your Payments: How to Get Retailers to Pay You Quicker!

Congratulations! You’ve just secured a major contract with a big-name retailer for your consumer-packaged goods (CPG). They’ve sent over a hefty purchase order—perhaps exceeding $100,000—with a delivery deadline in just 90 days. Even better, you’ve negotiated Net 30 payment terms, meaning that once your goods are delivered and invoiced, the retailer has 30 days to pay. 

But here’s the catch: retailers often pay late. 

According to Business Wire survey conducted in 2021, most U.S. small businesses operate on Net 30 terms, yet a significant percentage experience late payments—sometimes as much as 90 days past the due date. That’s a major cash flow headache. 

Why Timely Payments Matter:

Cash flow is the backbone of any business. Delays in payments can create serious operational challenges. Here’s why getting paid on time is crucial: 

1. Covering Expenses & Overhead 

From payroll and rent to inventory and utilities, overhead doesn’t stop for late payments. Late payments disrupt financial planning and put unnecessary strain on flow and working capital. 

2. Delivering Quality Products Efficiently 

You invest time and money into manufacturing, logistics, marketing, and supporting sell-through. Delays in payment limit can damage relations with your vendors and suppliers and reduce your ability to reinvest in your business and fulfill future orders. 

3. Avoiding a Bad Precedent 

If you consistently allow retailers to pay late, they’ll assume it’s acceptable.

Proven Strategies to Accelerate Payments:

One of the toughest conversations in business is reminding clients about unpaid invoices. The good news? You can prevent many of these issues before they happen. Here’s how: 

1. Negotiate Clear Payment Terms 

Ensure all terms—including payment deadlines, penalties for late payments, and accepted payment methods are documented in a written contract and included your invoice. 

2. Offer Multiple Payment Options 

Make it easy for retailers to pay you. Accept checks, credit cards, direct deposits, and digital payment platforms like QuickBooks Payments, PayPal, Venmo, Apple Pay, and Zelle.  

3. Invoice Promptly & Automate the Process 

Send invoices immediately upon delivery and utilize accounting software like QuickBooks to automate and track payments. Digital invoicing ensures faster processing and reduces the risk of misplaced invoices. 

4. Incentivize Early Payments 

Offer discounts for early payments. A common incentive is “2% 10, Net 30,” where the client gets a 2% discount for paying within 10 days. However, at 2% for 20 days, factoring your invoice is much more cost effective. A typical factor would only charge 0.5-1% to advance funds for the same 20 days. 

5. Use Payment Reminders & Follow-Ups 

Send friendly, automated reminders leading up to the due date. If payment is overdue, follow up promptly—sometimes invoices simply slip through the cracks. 

6. Enforce Late Payment Penalties 

Clearly outline penalties for late payments in your contract. For instance, charge a 2% late fee on invoices unpaid after 15 days past the due date. 

Boosting Cash Flow with Invoice Factoring:

Even with best practices in place, waiting 30+ days for payments can be challenging.  That’s where invoice factoring comes in. 

What is Invoice Factoring? Invoice factoring is a financing solution where businesses sell outstanding invoices to a third-party financial company at a discount in exchange for immediate cash. A traditional non-recourse factor will also collect the payments and provide credit protection for credit related payment defaults. This provides instant working capital while offloading the hassle of chasing payments and determining customer credit. 

How Invoice Factoring Helps:

• Accelerates Cash Flow: Get paid immediately instead of waiting weeks or months. 

• Handles Collections: The factoring company takes over the collection process. 

• Provides Credit Protection: Minimize risk by outsourcing credit risk and management. 

• Improves Financial Planning: Dependable working capital means everyone gets paid on time, improving relationship with employees, suppliers and vendors.   

• Focus on Growth: With steady cash flow, you can focus on growth, not overdue invoices

Getting paid on time is essential for maintaining a healthy business. By implementing proactive payment strategies and leveraging invoice factoring, you can eliminate cash flow stress and focus on what truly matters—growing your brand and fulfilling more orders. 

Looking for a reliable factoring partner? CONTACT US TODAY to learn more and take control of your cash flow!