In wholesale, selling on credit is normal — retailers expect to pay after they have received (and often sold) the goods. But every credit sale is cash you are waiting for, and some of it may never arrive. Managing wholesale customer credit well protects your cash flow and your business. Here is how.
Why wholesale runs on credit
Wholesale buyers purchase in volume and typically pay on terms rather than upfront. Offering credit is often necessary to win and keep business — but it means your sales become receivables before they become cash.
The risks of extending credit
Credit ties up working capital and exposes you to bad debt if a customer cannot or will not pay. Concentrate too much credit in one buyer, and their failure to pay can threaten your own cash position.
Set credit limits and terms
Give each customer a credit limit sized to what you can afford to have outstanding, and clear terms for when payment is due. This caps your exposure per customer and sets expectations from the start — the core of managing customer credit.
Check creditworthiness
Before extending significant credit to a new buyer, assess their ability to pay — trade references and payment history reduce nasty surprises. Start smaller with new customers and increase limits as they prove reliable.
Monitor and chase
Keep a live view of who owes what and how overdue it is — an accounts receivable aging. Invoice promptly, follow up before and after the due date, and act quickly on overdue accounts; the longer a debt ages, the harder it is to collect.
Balance credit with your own cash
Align the credit you give with the terms you get from suppliers, so you are not funding customers' credit out of your own squeezed cash.
Manage credit with clear records
RushFlow tracks each wholesale customer's credit limit, balance and aging, and flags overdue accounts — so you extend credit safely and get paid.