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General Category => Going Pro => Topic started by: Pawtucket Patriot on March 30, 2013, 09:14:10 pm

Title: Credit Policies...
Post by: Pawtucket Patriot on March 30, 2013, 09:14:10 pm
For those who are self-distributing to on- and off-sale retail accounts, what sort of credit terms are you offering?  Do you even offer credit terms?  For a new brewery, it would seem that cash would be the most sensible option, but are retailers willing to do COD for your kegs/cases?

In Minnesota, we aren't permitted to extend credit beyond 30 days to any retailer.  But just because you can doesn't mean you should.  I mean, cash is always better, right?
Title: Re: Credit Policies...
Post by: nateo on March 30, 2013, 09:41:27 pm
It's really only big stores or chains that want to age their AP. If you're dealing with a mom and pop place, they'll likely pay COD. Especially if you offer 1/10 or 2/10 net 30, small businesses will jump all over that.

Also, some states restrict the kind/amount of discounts you can give, so make sure you even can.
Title: Re: Credit Policies...
Post by: Thirsty_Monk on March 31, 2013, 06:54:13 pm
A lot of the time this is regulated by state you are licensed in.
In WI invoice should be paid in 15 days from delivery.
A lot of small business will pay you on delivery.
Bigger Grocery/Liquor stores might take some time to pay.

I do "Pay on delivery" and it is been working for me.
So I do not think you need to do credit incentives.
Title: Re: Credit Policies...
Post by: Pawtucket Patriot on March 31, 2013, 08:12:31 pm
Thanks, guys.  I'm pretty sure that we will try to get COD to the greatest extent possible, especially when we're just starting out.
Title: Re: Credit Policies...
Post by: nateo on March 31, 2013, 08:33:38 pm
We have a few small suppliers who we pay COD, but only because they demand it.

If you give people net 30 but no discount, don't expect people to pay COD. Some might, but we never do. Everyone who gives us credit we take it, unless they give a discount for faster payment. Our bigger suppliers give us either net 30 or net 90.
Title: Re: Credit Policies...
Post by: micsager on April 02, 2013, 01:55:37 pm
In Washington, COD is mandated by law.  The LCB guy we spoke with even "suggested" not taking a check.  (Although I do)

The reason he suggested that, is that if a check is returned NSF, we have 24 hours to notify the LCB.  And they then give the retailer 24 hours to make it right, or lose their license. 

Title: Re: Credit Policies...
Post by: kylekohlmorgen on April 03, 2013, 06:29:16 am
In Washington, COD is mandated by law.  The LCB guy we spoke with even "suggested" not taking a check.  (Although I do)

The reason he suggested that, is that if a check is returned NSF, we have 24 hours to notify the LCB.  And they then give the retailer 24 hours to make it right, or lose their license.

So can you use the "Square" program to accept a retailer's credit/debit card, or is this even more risky?
Title: Re: Credit Policies...
Post by: nateo on April 03, 2013, 06:33:18 am
So can you use the "Square" program to accept a retailer's credit/debit card, or is this even more risky?

2.75% per swipe sucks. You'll be fighting thin margins to begin with, don't throw away almost 3% of your margin.
Title: Re: Credit Policies...
Post by: Jimmy K on April 03, 2013, 08:10:42 am
In Washington, COD is mandated by law.  The LCB guy we spoke with even "suggested" not taking a check.  (Although I do)

The reason he suggested that, is that if a check is returned NSF, we have 24 hours to notify the LCB.  And they then give the retailer 24 hours to make it right, or lose their license.
Doesn't that sound like a good reason to accept checks? Usually you must fight those on your own.
 
And 3% to a credit card processor isn't great - but neither is spending time getting customers to pay their bills. With a credit card you often have the money immediately.
Title: Re: Credit Policies...
Post by: micsager on April 03, 2013, 08:29:35 am
In Washington, COD is mandated by law.  The LCB guy we spoke with even "suggested" not taking a check.  (Although I do)

The reason he suggested that, is that if a check is returned NSF, we have 24 hours to notify the LCB.  And they then give the retailer 24 hours to make it right, or lose their license.
Doesn't that sound like a good reason to accept checks? Usually you must fight those on your own.
 
And 3% to a credit card processor isn't great - but neither is spending time getting customers to pay their bills. With a credit card you often have the money immediately.

I hear ya on the checks, but I'm really just a homebrewer who can legally sell beer.  I have but two accounts.  And the working relationship with these guys would be harmed if I had to "call the state" on them.  I take their checks without any problem.  And I do have the Square, for some small retail kegs we sell.  But, I charge more at retail, so it makes up for the 2.75%.

Title: Re: Credit Policies...
Post by: Jimmy K on April 03, 2013, 08:37:36 am
That is definately a unique situation. I'm sure collecting from customers like that is easier too (and there's only two of them).
Title: Re: Credit Policies...
Post by: anthony on April 03, 2013, 08:57:14 am
So can you use the "Square" program to accept a retailer's credit/debit card, or is this even more risky?

2.75% per swipe sucks. You'll be fighting thin margins to begin with, don't throw away almost 3% of your margin.

We do the flat fee of $275 with Square. I obviously can't share exactly what that works out to percentage wise, but it is well below 2.75% in our case.
Title: Re: Credit Policies...
Post by: kylekohlmorgen on April 03, 2013, 12:01:14 pm
So can you use the "Square" program to accept a retailer's credit/debit card, or is this even more risky?

2.75% per swipe sucks. You'll be fighting thin margins to begin with, don't throw away almost 3% of your margin.

You could just offer a "2.75% discount" when paid in cash.

(i.e. just mark up 2.75% otherwise)
Title: Re: Credit Policies...
Post by: nateo on April 03, 2013, 01:24:45 pm

You could just offer a "2.75% discount" when paid in cash.

(i.e. just mark up 2.75% otherwise)

Maybe, if your state allows that. Some states restrict the type/amount of discounts you can give as a wholesaler.
Title: Re: Credit Policies...
Post by: Thirsty_Monk on April 03, 2013, 07:21:06 pm
To my experience the Most of the businesses will pay with check or cash.
If their Check bounces you just do not do Business with them. If you are self distributing it is a long term relationships you are after anyway.

It is less likely that you are going to have none paying customer in so regulated industry.