A Checklist Before You Extend Buyer Credit

Every time grain leaves and the money is promised later, you are lending. Open account is the plain version. A collection against acceptance is a cousin. A letter of credit from a bank is a different risk, against the bank, and it is not what this checklist is about. Open account and collections are compared at https://goodsandgrain.trade/open-account-versus-collection. Before you extend the first, or the next, cargo on terms, walk this page.

How much, for how long

Write the amount that will be outstanding and the day it is due. Include freight you paid and demurrage you might eat if the argument drags. A price per ton is not the exposure. The exposure is tons times price, plus the costs you cannot recover if the buyer keeps the grain and stalls. If that sum would hurt the company, the cargo is too big for the term or the term is too loose for the cargo.

Shorter terms are less credit. They are not zero. A week is still a week of someone else holding your grain.

Who has actually paid you

The payer on the contract should be the company you checked, not a trading style, not a sister you have never invoiced. First-export mistakes around this confusion are listed at https://goodsandgrain.trade/first-export-payment-mistakes. A buyer who pays a small invoice is not automatically a buyer who will pay a large one. Raise the limit in steps you can survive, not in a jump that doubles your biggest unpaid bill.

If a report or a reference is available to you, read it as a reason to ask questions, not as a guarantee. Reports go stale. A recent missed payment of your own is fresher than a glossy file.

Documents that make a debt collectable

Credit without papers is a story. Credit with a contract, a bill of lading, a weight certificate, and an invoice that all name the same cargo is a file. How those pages fail when they disagree is described at https://goodsandgrain.trade/paperwork-mistakes-that-delay-cargo. Build the file before the due date, not after the buyer raises a sudden quality claim. Quality claims and payment delays sometimes travel together. A grade certificate from loading is what lets you separate them.

Know which court or arbitration the contract chose, in one sentence. If you do not know, you do not yet know what your credit is worth when it is unpaid.

A stop rule

Decide in advance what happens if an invoice goes past due. The useful rule is simple: no new cargo to that payer until the old one is collected or formally rescheduled. Loading the next vessel to preserve the relationship is how exposure stacks. A relationship that requires an ever larger loan is a credit problem wearing a commercial hat.

Tell the person who posts cash in your own company. A sale that sales staff call done and finance calls uncollected will ship again if nobody wrote the stop rule down.

Credit is a price

If you give terms, the price should reflect them. A buyer who demands open account and also demands the cheapest cargo is asking for the credit for free. You can say no, or you can shrink the tons. This checklist is not a command to refuse every term. It is a command to know the loan.

It is not legal advice. If the amount is large, have someone who collects trade debts read the contract before you ship.

Frequently asked questions

Is a short payment term still credit?

Yes. Any gap between their control of the grain and your receipt of money is credit. Short is smaller. It is not zero.

Does a familiar buyer remove the need for a limit?

No. Familiar buyers are where large limits hide. Cap the unpaid amount anyway.

What is the first sign to stop shipping?

A due date that passes without a clear, dated promise you believe, or a new dispute that appears only when the invoice is due.