How to Provide Supplier Terms to Your Customers

Your competitors are offering terms. Are you?

What are supplier terms?

‍In many industries, it is common for suppliers to provide net 45 day terms. Simply put, the customer is allowed up to 45 days to pay the invoice even after the product has been ordered or delivered.

Why do suppliers offer terms?

Cash is king! A common adage passed around business school classrooms (zoom chatrooms), the concept of preserving cash at the expense of financing fees or supplier relations is a focal point of CFOs everywhere. The longer your customers can wait to pay for your goods, the more money they can sink into growing their business.

What do I need to provide supplier terms?

A balance sheet (cash is king, remember?)! We would all love to be generous and hand out terms like it's Halloween, but sadly it is quite expensive and requires significant cash balances. Remember, customers don't always pay and your business still needs cash to run its operation. A simple rule of thumb when considering offering terms: you should have access to enough cash on your balance sheet to continue operations if 20% of your customers don't pay!

How else can I provide supplier terms?

If you are running tight margins or do not have a full-time A/R department, it might be better to outsource this function to experts. Third-party finance companies, like Daylit, are designed to help businesses of all sizes tap external balance sheets to make it easier to offer terms. Daylit was built specifically to handle the underwriting, funding and collection of payments/invoices in all high growth industries.

Sounds great... so how does it work?

Your customers who ask for supplier terms can instantly qualify with Daylit. When you share the invoice along with basic customer details with Daylit, your customer receives a simple link to share a bit more information on their business. After completing the two minute application, Daylit's system processes the data and presents them with an offer. Once accepted, Daylit pays you for the invoice on day one, you fulfill the order, and your customer pays Daylit over simple installments. That's it!

How do I get started?

Daylit's embedded finance technology may already be available with your inventory management system, point of sales provider, or bank. Check our list of partners, here. If not, you can contact us directly to set up your own, dedicated supplier term portal.