How do I fund a big new retail account that pays net-90?

The problem has two ends, and they need two products

A big new retail account is the best and worst thing that can happen to a distributor in the same week. The purchase order is larger than anything on your book. The supplier wants a deposit at order and the balance before the goods ship. The chain wants the product on its dock in three weeks and will pay you 90 days after that. Somewhere in the middle are drivers, warehouse staff and fuel that get paid every Friday. The money to buy the product and the money to carry the receivable are two different problems, and Dockdoor Capital funds them with two different products that run together.

Move one: fund the opening order

The buy side is a lump that has to be paid before the first invoice exists, which is exactly what a working capital advance is for. It is $10,000 to $2,000,000 over 3 to 18 months, underwritten off three months of business bank statements, with no minimum credit score, $15,000 a month in deposits and 6 months in business. The offer comes in about four business hours and funds in 24, which matters when the supplier’s quote expires Friday. Supplier deposits, full purchase orders, customs duty and freight are all approved uses. Approvals generally land between 75% and 150% of one month’s deposits, so if the opening order is far larger than a normal month, say so: the structure may be a shorter term that the factored invoices retire quickly.

If the account is going to reorder every month, open a line of credit instead of taking a one-time advance. A line of $25,000 to $500,000, at 600+ FICO, 12 months in business and $25,000 a month in deposits, opens in 1 to 3 business days and then draws the same business day each time a new purchase order lands. Each draw repays over 6 to 24 months as the goods sell through, and an unused line costs nothing. Open it before the second order, not during it.

Move two: factor the net-90 invoices

Once the truck is unloaded and the receiving clerk has signed the bill of lading, you have an invoice to a national chain on net-90 terms. That invoice is the strongest asset in the business, and it is the one that should be funding the 90 days. With a factoring facility open, you upload the invoice and the proof of delivery, and up to 90% of the approved face value lands in your operating account within 24 hours. The reserve is released when the chain pays, less the fee and less any deductions the chain took. The fee is set by the account’s credit, the invoice ageing and your dilution history, and is stated in the facility agreement before you sign.

The published illustration: a $100,000 invoice at a 90% advance rate puts $90,000 in your account within 24 hours; the $10,000 reserve comes back when the account pays, less the fee. On a net-90 account that is the difference between financing the chain out of your own payroll for a quarter and getting paid the day after delivery. A facility opens in 3 to 5 business days, runs up to $5,000,000, accepts invoices current through 90 days, and carries no minimum credit score, because the underwriting is about the chain, not you. Recourse and non-recourse facilities are both available.

Why not just take a bigger advance and wait the 90 days?

You can, once. A working capital advance is a fixed daily or weekly ACH, and a 90-day receivable means the debits start long before the deposit that was supposed to cover them arrives. One cycle is a bridge. Three cycles is financing a chain’s accounts-payable department with the most expensive of the five products, when a cheaper one was built for exactly that pattern. The published guidance on the working capital page says the same thing: bridge the gap once, factor it if it repeats. The advance or the line funds the dock; factoring funds the 90 days.

Deductions, chargebacks and the reserve

Large retail accounts deduct. Promotional allowances, shortages, late-delivery fees and slotting charges come off the remittance, not off a separate check. Under factoring that comes out of the reserve, not out of the advance you already received, so the 90% is yours on day one and the reserve absorbs the chain’s arithmetic. Keep the proof of delivery clean and the invoice matched to the purchase order; most deductions that are disputed successfully are won on the paperwork at the dock, and a clean dilution history lowers the fee on the next facility review.

What a chain account does not change

It does not change the criteria. The same $15,000 a month in deposits and 6 months in business apply to both products, and neither carries a minimum credit score. It does not change how you sell: the chain is invoiced on your usual terms, and a non-notification structure is available if you prefer the account not to see the factor. And it does not require collateral beyond the invoices themselves on the factoring side, or any collateral at all on a working capital advance.

What you’ll need

• Your 3 most recent full months of business bank statements as PDFs from the bank (4 if seasonal)
• The chain’s purchase order or vendor agreement, including the payment terms
• The supplier’s proforma invoice showing the deposit and balance due dates
• Your A/R aging, a customer list and sample invoices with proof of delivery, for the factoring facility
• Any advance already on the account, so both products are structured around it

One application quotes both sides. Working capital in about four business hours, the factoring facility open in 3 to 5 days — usually before the first truck leaves the warehouse.