Should I give my first wholesale customer credit?
Start with payment upfront or a deposit and balance before dispatch unless customer checks and your cash forecast support credit. If you offer terms, cap total unpaid exposure at an amount you can fund without using reorder money, and agree payment and dispatch controls. Check factory payment milestones with Cambridge China Bridge.
Check who will owe you the money
Ask for the customer's full business identity, company number where applicable, trading and billing addresses, purchasing contact and accounts contact. Match these against the order and credit application. Resolve differences between the shop name, ordering business and proposed invoice recipient before approving credit. Obtain a current commercial credit report and contact trade references independently.
Ask references whether payments arrive as agreed, whether invoices are disputed and whether orders have recently increased. Treat a credit recommendation as an input, not your spending limit. For a company customer, Companies House offers free alerts when company details change. A familiar trading name or a reassuring reference does not replace evidence that this customer can pay.
Choose what the customer pays before release
GOV.UK says you can set payment terms, including payment upfront. For an untested account, propose payment upfront or a deposit with the balance received before dispatch. Agree the arrangement before accepting the order. For stock bought specifically for that customer, size the deposit against the cash you will commit and the difficulty of selling the goods elsewhere.
Record when the deposit and balance are due, how the deposit is applied, and the agreed treatment of cancellation, shortages and returns. Ask a solicitor to review unfamiliar terms. Confirm receipt in your bank or payment provider account before releasing prepaid stock; a payment screenshot or remittance advice is not confirmation that funds have arrived.
Set a limit against money you can afford to lose
Use the China order working-capital guide to identify the cash needed for supplier deposits, balances, freight, import charges and essential operations. Decide how much customer non-payment you could absorb while still meeting those commitments. If there is no spare capacity, propose prepayment, a larger deposit or a smaller order.
Set a small opening limit within that capacity. Count unpaid invoices, dispatched but uninvoiced goods and the unpaid portion of orders approved for release against it, including VAT where charged. Deduct only payments received and allocated. Keep disputes within exposure until resolved. Test delayed collection using the late wholesale payment forecast, rather than assuming the customer will pay before your factory needs its balance.
Make the payment terms work in practice
Before dispatch, agree the payment due date or its calculation, the event that starts the payment period, the invoice destination and any purchase order reference. Ask accounts staff about invoice approval, delivery evidence and payment runs. Resolve a payment timetable that falls after your proposed due date before accepting it. Record who can approve changes.
Send the invoice promptly through the agreed route and confirm it has been accepted for processing. Retain the order, agreed specification, dispatch record and delivery evidence. Use the factory-to-customer traceability guide for linking delivered stock to its batch. Name an owner for checking upcoming receipts and following up missing approvals before the due date.
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Control further orders and review the account
Build an agreed dispatch hold into the supply terms for overdue balances or orders that would exceed the limit. Have a solicitor review its use for orders already accepted. Give sales staff and the warehouse the same release instruction. Require recorded approval for exceptions, supported by a fresh cash check; a promised payment should not automatically reopen the account.
Increase the limit only after reviewing actual payment behaviour, unresolved deductions, current customer checks and your own reorder commitments. Reduce exposure when warning signs appear. Cambridge China Bridge's staff in China can check factory payment and production milestones for your assessment. Keep customer credit approval with your business and arrange funding before committing money that collections may not replace.
Frequently asked questions
Do I have to give a wholesale customer credit?
You can propose payment upfront. Agree the payment arrangement before accepting the order, and offer credit only when customer checks and your available cash support it.
How much credit should I give a new customer?
Start within the amount you could lose without missing supplier payments or essential costs. Count all unpaid exposure and approved releases, not just overdue invoices.
Is a customer deposit enough to protect my reorder?
Only if the deposit and your remaining cash cover commitments even when the balance is delayed or unpaid. Assess customer-specific stock and resale difficulty before agreeing it.
Should I send another order if payment is late?
Apply your agreed dispatch controls, check the outstanding exposure and investigate the delay. Review existing order commitments before withholding dispatch; do not release stock solely on a payment promise.