[PART 2 - Net30 Terms] How to Build Multi-Million Dollar Brands

Hey all— the response to my previous post was quite positive and I got a lot of value out of the discussion. So, I’m going to try to add on to that content periodically but in smaller bits (single topics), rather than a giant ‘listicle’. Let’s be honest— who actually read all of that in one go? Anyways, I’ll start abbreviating the latter half of the title as HBMMDB going forward.

Link to Original Post: How to Build Multi-Million Dollar Brands

Recently I came across a thread started by @moveweight that inspired this post… Net30 = I’m Gonna Fuck You

Today’s Topic: Give Your Customers Net 30 Terms (and why you don’t have to get fucked (if you don’t want to))

Your B2B customers are likely to ask you for Net Terms. Big customers definitely will. You’re likely to be hesitant to comply (rightfully so), but what if I told you that you can…

  • Give your customers Net30, Net60, or even Net90 terms, AND
  • Still get most of your money up-front, AND
  • Make extra money offering Net Terms, AND
  • Offload the risk of non-payment onto someone else

To many of you, this sounds to good to be true. Others of you aren’t familiar with net terms. A handful of you big dogs in here are doing exactly this, already.

Disclaimer: None of this post should not be taken as financial or legal advice, I do have a finance degree that I never put to work directly (I really hate wearing suits).

And before we get into it, a bit about me in case you missed the last post—

I started my hemp business less than 2 years ago with my last $20k. Now we’re moving ~$750k in product a month (retail value) at gross profit margins of ~80%. We don’t grow and we don’t extract. We package product, brand it, market it, and distribute to 750+ retail stores in the south & midwest. We have 2 brands, soon to be 3 next month, and 4 the month after.

What are ‘Net Terms’? Net Terms are the option of a customer to pay an invoice after the date of purchase / delivery. An invoice that shows ‘Net 30’ as the payment terms means the customer gets 30 extra days to pay. You can often convince an established supplier to ‘give you terms’ after demonstrating your ability to pay on time. And you should ask for it— it’s great for cash flow.

There is a LOT more business debt in this economy than is tracked & recorded because of Net Terms. It’s this sort of ‘dark liquidity’ that’s been lurking around for a long time, but is lately gaining the attention of silicon valley startups, and thus the press, and thus your customers.

Another word for net terms is ‘tradelines’. Some suppliers report tradelines & associated payment history and these contribute to your business credit. Many will look at you funny if you ask them to report your tradeline for your credit’s sake.

What most smaller businesses offering Net Terms don’t realize is that you can ‘finance’ the invoices you give terms on. This is called ‘invoice factoring’, or, ‘selling your receivables’.

Here’s how it works: you sell something to a business on net terms → you email your invoice to a factoring company → factoring company advances you most of the money, less a small fee → your customer pays the factoring company the value of the invoice on or before the due date → the factoring company pays you the rest of the invoice (what they didn’t advance to you).

Your customers get to pay later and you still get most of your money up-front (up to 90%).

Right now, I’m paying just 2.4% to factor my invoices Net 30. That’s less than what most of you are paying for credit card processing. But this isn’t some special rate I qualify for— it’s just what my factoring company charges.

Now, depending on the state your business is filed in and what state laws govern your customer contracts, you may be able to charge your customer extra for the ‘extended payment terms’ (make it a line item on your invoice). In my state, I can. I charge varying fees depending on state usury laws (ask your attorney).

Sometimes I charge more than it costs me, and sometimes I waive the fee— I just try to break-even here. You can certainly make it a profit center. I’m not here to judge you.

The last thing to consider here: who is at risk if the customer does not pay?

The answer depends on your financing company. I searched and searched for an invoice factoring company who would accept hemp & cannabis clients. I finally found one. The terms / fees sounded good until I got the contract—they were going to charge me outrageous fees for my customers late payments and mis-payments (payments directed to me)!

But worse than that, they wanted me to sign away all of my business AND all of my personal assets as collateral!

Please, please, please do not sign up for anything like that. It is shark-y AF. One big invoice could go unpaid, you could struggle to cover, and they could fee you to death and take everything you have to your name.

This is what we call ‘recourse’. Mortgages have recourse clauses and so do auto loans. Often they’re this stiff.

But there is non-recourse invoice factoring available. That means if a customer doesn’t pay, you keep your advance on the invoice but don’t get the rest. The factoring company takes the rest of the hit (the advance). And you continue factoring all other invoices as normal.

Any non-recourse factoring company is going to want to qualify your customers, as they should. Someone needs to qualify these customers. And I mean legitimately— not just you deciding they’re good because you’re drinking buddies with them and they’ve never failed to pay you on time. I mean credit checks and other serious underwriting practices.

With a good factoring company, you can have the customer apply for the ‘line of credit’, or you can apply for it for them in the background. Either way, a good factoring company won’t ding their credit with the check. And they won’t check personal credit— just business.

You should not be blindly holding this risk on your books with little to no diversification. You are not a bank. You sell products / parts / services. You need a non-recourse factoring company, or you need to collect up-front. Period.

Get this in place and you will get more new customers, they will spend more money, and you will reduce your risk!

What you want: Low Fees (<3% for Net 30), Cannabis / Hemp Approved, High Advance Rates (80%+), and Non-Recourse Terms (bulk of risk is on factoring company).

There are LOADS of these companies out there. Finding the ones that tick those boxes is tougher.

I wouldn’t go to any that say they specialize in Cannabis or Hemp. They will just tell you it’s ‘high-risk’ and charge you extra. That’s true in merchant processing but not as much here.

If you want to apply for my factoring provider, you can DM me for their URL. If you want an actual invite & don’t mind me getting an Amazon gift card, DM me your email address & website and I’ll get you an invite.

If you qualify, you will get a free trial to credit check some customers (without notifying them). $50/mo after trial gets you 5 credit checks per month, which are normally $10 each. If you have a lot of customers, you will want the $200/mo plan because it gets you lower fees (2.4% vs 2.6%) and you will probably use the extra credit checks.

Alternatively, you can just google ‘invoice factoring’ or ‘sell my accounts receivables’. Watch out for sharks!

I can tell you from working in the retail channel, most established stores have net terms with their beer, liquor, and candy distributors. They don’t get terms with most ‘novelty’ distributors. It’s a big differentiator.

Still, some customers won’t take advantage because they have moral / ethical objections to debt.

Lastly, if no one has ever asked you for terms / extra time to pay, you probably don’t need to worry about this.

Happy to answer questions as time allows! Please ask non-private questions in this thread so all readers can benefit.


Excellent factoring sop sir. A million thanks


Can you factor L2L cannabis?

For hemp I assume it’s pretty simple because they actually have things like easier banking. Cannabis is a bit more tricky.

Net 30 works great in the normal business world, but l2l cash business seems like it misses out on those benefits.

Lmk your thoughts for L2L Cannabis. That’d be something I’d be interested in learning.

Great question!

First thing I asked my factoring co on my sales call was “before I waste your time— do you serve cannabis clients? Hemp?”

They said “yes, we have cannabis clients. But it depends. What you’re doing is fine.”

I didn’t ask for anymore details.

The shark-y company had similar to say.

I’m guessing it depends where you are in the supply chain. If you’re limited to cash-only now, I’m guessing this isn’t available to you.

But there could be some sort of DeFi/crypto solution out there. @Future might know.

Most don’t have a means of turning cash to digital.

Without tons of cashiers checks etc.

I’m interested in talking to anyone that has factoring for licensed cannabis.

This has always been interesting to me. I don’t know if this is already known to everyone or not…

is another solution.

But nothing really for the processor / grower.

Which is where my gripe originates.

Let’s do a podcast episode!


@COVID-69 another great topic. I have a slightly different take on this. Factoring has been around for decades in some industries it is a must such as a trucking for most of the owner-operators as the standard payout is about 35 days from shippers/brokers. We used this in our trucking business and it is very standard.

I haven’t personally used this but their is also “insurance” available for verified businesses that costs a lot less however I know for a fact they are very strict whom you can give net days too.

There also services such as behalf that are cheaper however limited to certain businesses plus it is like getting a credit line approved.

We had done net 7, 14 or 21 days but during Covid we just stopped. Instead of paying up customers would ask us if we had not gotten money from the government. Proceeded to tell us how they got so much money except our invoices weren’t getting paid. So we put a stop to it for everyone.

We self financed those invoices by creating a risk profile of our customers. For example if you owned a stand-alone vape shop you didn’t get any net days until we felt comfortable and have been in business with you for sometime.

For Smoke shops if you had decent amount of inventory. A lotto license along with a good collection of cigars etc. We gave them some net days. If the owner owned multiple businesses we gave them little bit more net days.

Gas stations that move little bit of volume we gave them net days. If it was an owner operator or customers like we have where they own 10-70 locations that are worth millions each location. We basically have rolling net days. They are always paying us…we are always supplying them. There is no set net days but it never exceeds a month in most cases.

The reasoning behind this is very simple. You can start a small vape shop with little to no money. Don’t need good credit or a reliable business history. You start a smoke shop. Have the state license you for lotto and you spent couple of hundred thousand to start your shop. Chances are your not going out of business cause there is a flavor ban or a CBD ban or a Delta 8 ban.

You have lotto to sell, beer and cigars. Your going to be in business. Gas stations are worth quite a bit of money. You don’t pack up and leave unless your leasing…in that case they never got much net days unless they built that trust with us.

While net days are critical and are needed. I have millions in lines of credit. From RAW to JUUL, Vuse, Logic and dozens of other companies in between.

These lines were established over a period of time. References and personal credit history matters.

Don’t get me wrong in my opinion this industry suffers the way as OTR truckers do. They all love their job and they are critical to our economy. None built their credit the proper way and end up financing beat up trucks for 16%-35%

Everyone ends up needing factoring…that is lot of money being left on the table.

Also factoring doesn’t work in some industries. You need traditional lines of credit or self fund them. Tobacco products for example just don’t have the margin to factor invoices. Once operating expenses are taken out…you would be making nothing if not losing some money.

However, my advice to anyone and everyone. If your serious about being in business. Work on your personal credit as the first step.


You don’t know how companies doing the factoring treat your customers. It could reflect very poorly on the relationships and image you helped build around your business.

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Excellent point! Thank you for adding.

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I’m interested! DM me info please :slight_smile:


Thank you so much for adding this more practical, next-level insight @Distributionly !!

For those unfamiliar, @Distributionly has about 10x my experience distributing to smoke shops & gas stations, and I’m guessing he brings in at least 10x the revenue.

This is how it starts to look at that next level. I make good money but haven’t been for long. Self-financing would be tough for me from a cash flow perspective, and I can’t diversify across as many customers.

Further, he has some really unique, nuanced ways of ‘underwriting’ the ‘credit’ he is extending. I had not even considered how much more ‘good for it’ someone who owns their store is vs someone who leases it.

I’ve noticed that the really massive distributors practically treat the stores’ shelves as their own shelves. Very loose, flexible net terms— they don’t even sweat it too much if they get stuck with ~$20k unpaid because someone went out of business. Cost of doing business! And they’ll take returns and exchange products with virtually no questions asked.

This all makes sense— the product can sit on your shelves or it can sit where it can move. Just make sure you get paid in a reasonable time frame.

I have to imagine you can charge higher prices, too, if a store can sell product before they pay for it themselves. So your margins go up, and you can still get the money up-front if you want via factoring.



Would it be too much to ask to see your “clause” pertaining to net 30 etc. Pardon my ignorance.
What I mean is like is there a paragraph at the bottom of the invoice that say xzy. Or do you do independent contracts?
Thanks again


I have contracts with every retailer that address these terms, but those contracts are covered by confidentiality agreements.

All invoices say they are subject to the terms of our core contract.

This is where I recommend speaking with an attorney. Start on LawInsider, taking language from other people’s contracts to piece together your own, then ask your attorney to check your work.

Way cheaper and way better learning experience than paying an attorney to write it from scratch.

By the way— do you own The Green Dot Store? Dispensary in Denver? I swear I just saw one there in LoDo area when I was there for my sister’s wedding. Pardon my ignorance.


No. I am based in SC. If you’re ever around I’d love to buy you a steak, or a drink. It’s the least I could do for the knowledge bombs that you have dropped



That sounds good to me!

I’m in Asheville this Tuesday to next Tuesday if you’ll be in that area by chance. I’ve only been through SC to connect to Asheville or drive up from ATL lately.

I’ll be moving out to Asheville late in the summer though and will be taking some nice weekend trips around with the old lady. Where in SC are you at?