Insights — Channel Creation & New Revenue Streams — 3 min read
Navigating Payment Terms When Moving Into B2B
In the D2C world, cash is immediate. In B2B, cash is a negotiation. Understanding how to manage payment terms is the difference between growth and insolvency.
In short
Payment terms in B2B are the agreed-upon period a buyer has to pay an invoice, typically 30, 60, or even 90 days from the end of the month. Unlike B2C, where payment is instant, B2B transactions rely on credit. To manage this safely, you need a clear credit policy, a process for checking a customer's creditworthiness, and a robust credit control system to ensure invoices are paid on time. For a new B2B channel, starting with 'Pro Forma' (payment before delivery) for the first few orders is a common way to build trust before offering terms.
One of the most jarring transitions for a D2C founder moving into B2B is the first time a customer asks for 'Net 30' or 'Net 60' terms. In a consumer business, you get paid before the product leaves the warehouse. In a business relationship, you are essentially acting as a bank for your customers.
Payment terms are not just an administrative detail; they are a fundamental part of B2B commercial strategy. If you get them wrong, you can find yourself with a growing sales pipeline but a bank account that is empty.
Why businesses demand terms
It's not that businesses don't have the money; it's that they need to manage their own cash flow. A wholesaler might buy stock from you today but not sell it to their customers for 45 days. By asking for 60-day terms, they ensure they have the cash from their sales before they have to pay you. If you insist on upfront payment, you may be excluded from large-scale procurement processes.
Common B2B payment structures
| Term | Meaning |
|---|---|
| Pro Forma | Payment is required in full before the goods are shipped. |
| Net 30 | Payment is due 30 days after the invoice date. |
| EOM (End of Month) | Payment is due a set number of days after the end of the month the invoice was raised. |
| CIA (Cash in Advance) | Similar to Pro Forma, common for new or high-risk accounts. |
| Early Settlement Discount | A small percentage off (e.g. 2%) if paid within 7-10 days. |
Protecting your business
Offering credit is a risk. You must treat it as such. This means using a credit-checking service before agreeing to large orders on terms. It also means having a clear 'Stop List'—if a customer hasn't paid their last invoice, you do not ship the next one. Many D2C brands fail here because they are so excited about the big order that they ignore the risk that they might never get paid for it.
Automating the headache
As your B2B channel grows, manual invoicing and chasing becomes impossible. This is where AI Workflow & Commercial Automation /ai-workflow-commercial-automation comes in. You need systems that automatically send reminders, flag overdue accounts, and even restrict ordering for customers over their credit limit. The goal is to make the payment process as invisible as the D2C checkout, even with the added complexity of terms.
Could your business support another route to revenue?
Evans Channel Creation identifies, validates and builds additional revenue channels from capabilities a business already has — B2B to D2C, D2C to B2B, product to service, recurring revenue or partners — and says so plainly when a channel should not be built. Programme from £1,995 + VAT per month over six months.
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