“If you don't settle the payment, I can't even afford to celebrate the New Year!” This helpless remark from a distributor echoes the sentiments of many peers. After a busy year, as the Spring Festival approaches, settling accounts and collecting debts have become a heavy burden for many distributors. Collecting Payments Is Getting Harder Every year, collecting payments is difficult, but this year it's especially tough! “I've been asking for payment for months, but the amount I've actually received is pitifully small, and most are delayed again and again.” Distributor Mr. Li (pseudonym), who has been repeatedly delayed payment by downstream clients, complained about receivables, “This year's bad debts are significantly higher than before, expected to be 7 to 8 percentage points higher than last year!” Analyzing the reasons, on one hand, store performance itself is declining, making payment difficult; on the other hand, distributors deliver goods to stores without knowing how well they sell, relying entirely on the store owner's word. “Everyone says it's hard, but who isn't? One store received 140,000 yuan worth of goods last year, but by the end of this year, less than 30,000 yuan has been collected. ” According to Mr. Li, many stores' payments are chased from the beginning to the end of the year, with different excuses each time, but all complaining about bad business and products not selling. As a result, distributors often lose the upper hand in negotiations. Facing this situation, Mr. Li doesn't dare to push too hard. After all, times have changed; the market is sluggish, products are hard to move, and there's a pile of inventory. If not handled well, terminal customers might directly retaliate—take the goods away and stop selling! Distribution is a tough business: not owing upstream money, not owing downstream goods, but easily getting trapped and caught in a dilemma. “Look on the bright side, those willing to stock up now are those with good relationships; small shops won't even bother with hoarding!” Mr. Li joked, “Let it drag on, as long as I can get the payment back!” Credit Periods Are Getting Longer “It's common for supermarket credit periods to extend from two to three months to six months or even a year!” Many distributors report that credit sales are prevalent downstream, and credit periods have significantly lengthened this year, greatly increasing distributors' financial risk. A distributor in the daily chemical industry in a third-tier city, Mr. Wang (pseudonym), has deep experience. In his region, credit sales are rampant, not only are supermarket credit periods extended, but many small shops that originally insisted on cash payment have also followed suit, proposing credit periods ranging from ten days to two months. Mr. Wang told the author that such customers typically fall into three types: the first is affected by discount stores and flash warehouses, with declining foot traffic and sales, genuinely unable to pay cash; the second is due to the overall market downturn, customers choose to take goods in small quantities and multiple times to reduce risk, and for convenience in accounting, they settle payments uniformly. For the first two types, Mr. Wang can understand. However, the most headache-inducing is the third type—customers who have money but deliberately delay payment, thinking, "If others owe, I'll owe too!" “These customers usually have good single-store output and can afford to be arrogant,” Mr. Wang sighed, “but if they continue to owe, we have to withdraw; the small profit margin isn't even enough to cover bank interest!” Another distributor told the author that since Pang Donglai began frequently assisting competitors, “supermarket adjustment” has become a hot topic. Many regional supermarkets have followed suit, implementing so-called “adjustments,” which brings significant pressure on suppliers. “They want the same products as Pang Donglai, they want internet-famous items, but they don't consider whether they'll sell in a different region! It ties up capital and inventory!” Supermarkets want differentiated products and low prices, but the promised “zero credit period” is hard to implement—sales don't increase, profit margins genuinely decline, supermarket funds become tighter, and credit periods lengthen. Stores Run Away with Goods and Payments, Distributors Suffer Heavy Losses “After dragging on, last month it finally closed!” A daily chemical distributor revealed to the author that in his city, two long-established supermarkets, due to poor overall consumption this year and inability to cover operating costs, chose to close down one after another, still owing him over 200,000 yuan in payments. Similarly, another distributor, Mr. Zhao (pseudonym), said, “It's not just big supermarkets; many small shops are also struggling to survive.” According to Mr. Zhao, one of his downstream partners, a fresh food store with nearly six years of cooperation, suddenly closed without notice in November, ignoring all messages from suppliers in the group. Fortunately, early in the year, he noticed the store's performance was clearly declining, so he was cautious, not stocking too much, delivering in small quantities and multiple times, and strictly controlling credit periods, thus avoiding major losses. But most distributors are not so lucky when stores run away. The author once heard from a distributor friend that a supermarket in East China suddenly changed its sign after two years of operation. Initially thought to be a partner change, the new store, less than two months after opening, ran away with millions of yuan in supplier payments, and they are still fighting legal battles. Credit Sales Are Easy, But Clearing Accounts Is Hard Distributors Must Prioritize Financial Management Credit sales are easy, but clearing accounts is hard. Owed payments are a long-standing issue in distribution. On one hand, some channels have long-standing “unspoken rules” that force distributors to comply; on the other hand, distributors often have to make concessions to complete distribution, stock pressure, or even secure terminal cooperation opportunities. However, credit sales themselves are not a scourge; what's truly terrifying is the resulting bad debts and dead accounts that severely erode distributors' financial health. The root cause of this situation is: many distributors lack a systematic approach to financial management and credit period management. During visits, the author found that many distributor bosses, once their business exceeds 30 to 50 million yuan, start having organizational layers, but the boss remains business-oriented—focusing more on expanding business scale, increasing shipments, and expanding store coverage, while neglecting management issues. This leads to many distributors finally scaling up, but upon calculating, they find profits are thinner or even losses. When business reaches a certain scale, the team grows, organizational layers appear, and information transmission inevitably suffers losses. At this point, management is crucial, especially the management of various expenses and credit periods with upstream and downstream partners. For Upstream: Standardize Expense Control Processes to Prevent Financial Black Holes To do well in the market, marketing expenses are necessary, but activities coordinated with manufacturers often require upfront payments for special prices, floor displays, gifts, and promotional staff, which are later reimbursed. After an activity, calculating profits and losses, especially price differences, can be a headache. Without a streamlined, standardized financial system, it's easy to form a "financial black hole." For example, special price difference calculations may deviate due to inaccurate sales forecasts, and expenses for ground promotions, gifts, and promotional staff may be falsely reported or duplicated due to lack of clear review processes. This leads to constant changes in the distributor's accounts, mistaken for inventory or extended credit periods, but in reality, they are subsidizing the business. For Downstream: Establish Accounts Receivable Systems and Maintain Sensitivity to Bad Debts Cash flow is the lifeline of distributors. If you owe 800, he owes 100, I owe 2,000, funds won't circulate. Especially in today's uncertain business environment, any credit sale carries the risk of non-payment. Distributors must set up early warning mechanisms for accounts receivable management, try to shorten credit periods during contract negotiations; for circulation channels, strive for cash on delivery, establish relevant systems, and avoid cultivating the bad habit of "taking for free." From order placement, picking, delivery, reconciliation, invoicing, sending invoices, payment collection, to clearing accounts, distributors are familiar with the entire business process, but the key is whether dedicated personnel are arranged to regularly track and check. For example, for each store, how much has been reconciled, how much hasn't, the credit period, whether it's exceeded, etc. These checks are crucial in capital turnover. Distributors should increase attention, establish a dedicated personnel inspection mechanism, confirm whether notification slips are collected, whether invoices are issued on time, and whether payments are collected by the due date. Establish an accounts receivable risk management system. Salespeople also need to constantly monitor the operating conditions of terminal cooperative customers and maintain sensitivity. For example, if payment was originally due on the 20th, but by the 25th or 30th it hasn't arrived, stop delivering and start clearing accounts and demanding payment. Final Thoughts For distributors, ten years ago, money was earned; today, it's calculated. When it comes to increasing revenue and seeking benefits from the market, every distributor boss has their own methodology; but for cost control and expense management, many distributors don't pay enough attention. In the past, in an era of growth, even if upstream pressured stock and downstream owed payments, life could still go on because the economy was improving and funds could circulate. Now entering a shrinking market, the cake is smaller, but the number of people dividing it has increased, making the survival environment for distributors increasingly harsh. They must prioritize cash flow issues. On one hand, reduce credit sales, improve financial management systems, and accurately calculate the visible "accounts"; on the other hand, pay attention to "invisible accounts"—which brands, products, and channels contribute the most and are most profitable? Which ones don't make money? Focus on key priorities and goals, allocate limited resources accordingly, and implement more refined management. 【New Order · Symbiosis】 The 10th China FMCG Innovation Conference Time: March 17-19, 2025 Location: Chengdu, China