A new distributor may ask for net terms while the supplier is also carrying inventory, freight and market-entry risk.
Separate gross margin from cash exposure. Inventory, freight, payment delay, returns and support can make a deal look profitable on paper while consuming cash in practice.
Start with information
Company history, references, order size and expected frequency help frame risk. Formal credit checks may be appropriate in some relationships.
For “Start with information,” ask who carries the failure when the normal plan breaks. Damage, late delivery, slow sell-through and customer returns are not edge cases for physical products; they are part of the commercial design.
Use staged trust
Prepayment, deposit plus balance, smaller initial orders or shorter terms can create history before exposure grows.
For “Use staged trust,” write inclusions, exclusions and timing beside the number. A price without scope creates a second negotiation later.
Match terms to margin
Thin-margin deals cannot absorb long collection cycles and disputes easily.
For “Match terms to margin,” run the smallest version that still looks like the real business. One region, one account type, one delivery partner or one initial order can reveal the operating cost without pretending it proves national demand.
Define deductions
Returns, freight claims, promotions and chargebacks should not become unilateral invoice reductions.
For “Define deductions,” save the service level, appointment rule and damage procedure with the order. Logistics promises should be as specific as product promises.
Pause rules matter
Know when overdue balances stop new shipments. A rule is easier to apply when it was agreed before the problem.
For “Pause rules matter,” run the smallest version that still looks like the real business. One region, one account type, one delivery partner or one initial order can reveal the operating cost without pretending it proves national demand.
What would change the decision
For this article, name the evidence that would make you reverse course—better conversion, lower damage, faster delivery, stronger partner reporting or a different cost structure. Review on a date, not whenever someone feels nervous.
What belongs in the file
For this article, save the current price, responsible parties, delivery or payment terms, the agreed exception process and the review date. Commercial memory should not live only in chat history. For this topic, the first things I would put on that review are start with information, use staged trust.