Importers compare suppliers on unit price and ignore the term sheet, even though the term sheet is usually worth more than the price difference. A three per cent lower unit price on thirty-day terms is often a worse deal than a standard price paid across four shipments. The reason is simple: your money has to come back before it can be spent again.
1. What Each Term Actually Does to Your Cash
Telegraphic transfer with a deposit is the default in this trade: a percentage up front, the balance against a shipping document. It is fast, it requires no bank instrument, and it means your cash leaves before your goods ship. A letter of credit inverts part of that risk, because the bank releases payment against compliant documents rather than against your trust in the supplier. It costs a fee and adds documentation discipline.
The practical difference shows up in the cash conversion cycle. Every extra week of deposit lead time is a week your capital is exposed to a shipment you have not yet received, and it is a week your next reorder has to wait.
2. Sizing a First Order So a Delay Does Not Break You
Illustrative framework only. Take your expected monthly sell-through in packs, and set the first order at roughly the value you can clear in one reorder cycle. If a shipment is delayed by three weeks, that sizing means the worst outcome is a slow month rather than a stock-out on your best-selling SKU. Deposits feel efficient because they unlock a lower unit price, and they are only efficient when the order size is genuinely matched to demand.
3. Which Products Do the Work in a Tight Cash Month
- Volume anchors: high-turn bulk in natural black and one blended tone. Low margin, but they clear fast and fund the reorder.
- Fast-turn prepared formats: pre-stretched and pre-formed material that stylists buy repeatedly without a consultation cycle, so it turns over in weeks rather than seasons.
- Premium colour lines: salt-and-pepper, ombre and multi-tone bulk. Lower velocity, materially better margin per pack, and the reason a slow month does not become a loss month.
4. A Reorder Rhythm That Protects Both Sides
The most durable arrangement in hair wholesale is a small, predictable, repeating order rather than a large opportunistic one. Suppliers can hold your specification and colour ratio; you get a shorter deposit exposure and a fresher batch. Set a reorder trigger as a stock level rather than a calendar date, and renegotiate the term sheet only once trading history exists on both sides.
The Distributor Cash-Flow Starter Bundle
Three bulk formats that behave differently on the balance sheet: a proven volume anchor, a fast-turn pre-stretched SKU, and a premium colour line that protects gross margin when cash is tight.
