Deposits and Terms That Keep Cash Moving

A customer orders bespoke goods worth twelve thousand dollars and asks for thirty days after delivery. You have already paid for materials and labour. For six weeks you are the bank. Deposits exist to move part of that financing back to the buyer, and most sellers who adopt them find the policy changes conversations rather than losing orders.

Size the deposit from what you spend first

Add the material cost and any tooling or setup charge you pay before starting, then set the deposit to cover roughly that. It is not a profit margin and does not need to be a fixed percentage. Explaining it that way, as covering the inputs bought on the buyer's behalf, converts far better than presenting it as a company rule.

For repeat customers, replace the deposit with a credit limit once they have paid cleanly three times. That rewards reliability and keeps the paperwork light. Track the limit against actual payment behaviour quarterly, because a customer who slows down is telling you about their own cash position before they tell you in words.

Thirty days and payment on delivery are not close

Compare the two terms by what each costs you in financing. Thirty-day terms on a ten-thousand dollar invoice means carrying that amount for a month; payment on delivery means carrying nothing. The gap between them is frequently larger than the margin difference between two competing products, which is why terms are worth negotiating as hard as price.

Practical move: add a small early-payment credit, two percent within ten days, and watch how many buyers take it. The ones who do are your best cash customers and deserve priority allocation. Those who consistently pay on day fifty-nine are a different kind of customer, and should get a different payment term.

Chasing late payments damages relationships

Automated reminders on day one past due annoy reliable customers who simply forgot, and they rarely move habitual late payers. Send the first reminder before the due date as a courtesy, then escalate on a fixed schedule. Predictable escalation collects more than frequent, personal and increasingly awkward messages.