Wholesale Credit Terms and Collections That Preserve Cash

Wholesale sales are great for volume, but they can drain cash if your credit terms are loose. A simple credit policy keeps customers happy and your bank balance healthy.

This guide shows how to set terms, limits, and collections steps that protect your bakery.

Start with clear terms

Do not wait until the invoice is late to explain payment expectations.

Typical terms:

• Net 7 for new accounts
• Net 14 for established accounts
• Net 30 only for proven, high-volume customers

Shorter terms reduce your cash gap and force cleaner ordering behavior.

Set a credit limit for every customer

A credit limit is your maximum risk exposure.

A practical formula: ` Credit limit = Average weekly order × 4 `

If a customer averages $2,000 per week, a $8,000 limit covers one month of orders. If they want more, require prepayment on the overage.

Use a simple credit application

You do not need a long form. You do need the right fields.

Include:

• Legal business name and address
• Tax ID
• Owner name and contact
• References
• Agreement to terms

If a customer refuses the form, start with prepaid orders.

Send invoices fast

The clock starts when the invoice is sent, not when the delivery arrives.

Best practice:

• Send invoice same day as delivery
• Include PO number if required
• Attach delivery confirmation if available

Follow a calm collections schedule

Collections should be consistent and predictable.

Suggested cadence:

1. Day 1 past due: Friendly reminder
2. Day 7 past due: Phone call and payment plan
3. Day 14 past due: Pause new orders
4. Day 30 past due: Account review or collections partner

Consistency matters more than the exact schedule.

Measure DSO and aging

DSO (Days Sales Outstanding) tells you how long it takes to get paid.

DSO formula: ` DSO = (Accounts receivable ÷ Total credit sales) × Days `

Use an aging report weekly. If 20% of your receivables are over 30 days, tighten terms.

Protect relationships while enforcing policy

Clear rules actually reduce conflict. Customers feel more comfortable when the policy is the same for everyone.

Use this language:

• "We want to keep production smooth, so we require payment within the agreed term."
• "We can keep your pricing stable when accounts stay current."

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