Discuss the process of getting your t-shirt line into brick and mortar stores and selling offline. Topics include industry tradeshows, events, line sheets, sales reps and other retailing tips and advice.
We've been selling online for a couple of months now and are now ready to target some retail stores.
From reading related postings, seems as though somewhat standard payment terms for small retailers is Net 30. Those terms will probably go to Net 60 or greater as we move to larger retailers.
One of the key risk factors we see of going the wholesale route is clearly the potential for payment default. I have several questions I was hoping you guys could provide some insight on:
1) I would much prefer these wholesalers to pay with credit card as opposed to giving them Net 30 days payment terms to lower this risk. I would be open to giving them an additional discount if necessary to go this route. Is this common at all? Have you ever seen retailers accept this payment form? Does it make sense to do this?
2) Is there any smart way to limit this payment default exposure. Taking them to court will almost always cost me more money than what they actually owe me. Has anyone come across any interesting ways to really limit this exposure?
3) Another idea which came to mind was charging the wholesaler effectively 50% upfront (the cost) and then the other 50% Net 30 and offering them a bit better pricing. Is this approach ever used?
Thanks in advance for any and all guidance.
JDT
JDT
You should be looking at a factoring company regarding payment risk exposure.
Credit cards are good but the idea of 50% now and 50% in 30 days will not fly
Last edited by Rodney; June 8th, 2007 at 02:34 PM.
Reason: removed self promotional info as per forum rules
Thanks for the responses. Good to hear that you can get COD often times.
Also very much like the idea of invoice factoring as this is probably a good way to solve any cash flow problems as well as limiting credit risk. Thanks for all the insight!!!
JDT
individual stores: you should get COD or prepayment on first orders.
If a retailer declines, then they probably owe other companies
money and are looking for a 'bump' — they get some new goods
they can sell with no upfront monetary commitment. Not a good
idea to ship to these people. (exceptions to every rule)
Retail stores with multiple stores will insist on terms, and it's a tough
call whether to carry the paper yourself or use a factor.
Once you start shipping bigger clients, using a factor
is one reliable way to protect yourself.
The factor will know the precise financial condition of
your retailer, and will collect the money for you.
You can borrow up to 80 percent on the invoice after you ship,
to pay your vendors, or you can defer an advance.
Rates for a factor range from 2 percent to 8 percent, depending
on the situation, and whether you borrow on the invoice.
Last edited by oddica; June 11th, 2007 at 09:04 PM.
I am about 6 months removed retail, although it was lowes, not clothing retail. We got billed on Net 30 from everyone, never paid sooner than 60.
It was just how it worked.
Payment Terms with Retail Stores 
