Shop Talk: Practical answers for tough business questions

by : 
Kim Perkins
April 1, 2014

Question: More and more, it seems vendors are not extending terms and are asking for payment up front or with a credit card. I understand and even expect this for the first order or two from a new vendor as we are getting to know and trust each other. After that, though, I expect Net-30 terms to be available. Even a few vendors I have had long-term purchasing relationships with are now saying I have to pay by credit card when the order is placed.

I don’t like this for a number of reasons: I’m not set up to pay before delivery; I don’t have high available credit card balances; it costs more to pay upfront due to the interest charged if I don’t pay the card in full each month; and it can be hard to get a refund if something in the order is damaged or missing.

I have always paid our invoices on time, so I’m not sure why this is happening. I am starting to take it personally. Does this demand for upfront payment only happen to me? Do you have a suggestion for how I can avoid it?

Answer: First of all, know that the practice of vendors asking for upfront payment is not personal. It is a consequence of the recession, when so many retail businesses were unable to meet their obligations and eventually went out of business, leaving the vendors without their money or their product. Some vendors have been forced to ask for payment at the time the order is placed just to be able to stay in business themselves.

Your objections are valid. Sometimes we face the same issues in dealing with refunds and damages, too. The important thing to remember is we are all in this together—vendors and retailers alike—and we want to do what we can to support each other. It would be great if more retailers were as responsible as you and paid their invoices on time. What I hear from vendors is Net-30 terms often become Net-45 or Net-60 without their approval, because retailers just pay late. That makes it very tough for vendors to have adequate cash flow to manufacture products and pay their employees.

When a vendor requires payment upfront, you have to make a decision whether the merchandise they offer is important enough to your merchandise mix to warrant payment prior to receipt of goods. For me and my business partner, sometimes it’s worth it and sometimes it’s not.

There are other things you might suggest to “meet in the middle.” Maybe a vendor—especially one you have had a satisfactory long-term relationship with—will give you Net-10 or Net-15 terms. That would allow enough time for you to receive the merchandise, make sure it’s undamaged, and send payment within a few days. You also can talk to your banker about issuing you a debit card that can be processed as a credit card. The money will be debited from your account right away, but you avoid interest charges that could occur if your balance is not paid in full by the vendor’s statement date.

Kim Perkins is co-owner of Elysian Fields Books & Gifts for Conscious Living (, an award-winning store in Sarasota, Fla. Send your retail questions to