Finance · CCC Series Part 4

Improve Your Billing & Payment Cycle: Get Paid Faster

Net-60 payment terms with Delhaize, Carrefour, or Colruyt are not negotiable for a small brand. They are the price of shelf access. Accepting that reality does not mean accepting passivity about everything else. Between the moment your truck leaves your warehouse and the moment the wire hits your account, there is a long sequence of steps — most of them controlled by you — that can either accelerate payment or let it drift past 90 days.

This article is about the billing and payment cycle: the last and most financial segment of the cash conversion cycle, and the one where most Belgian SMB brands leave the most money on the table.

1. The DPO Formula and the Supplier Financing Strategy

Days Payable Outstanding (DPO) is the mirror image of DSO. While DSO tells you how long your customers take to pay you, DPO tells you how long you take to pay your suppliers. The strategic insight: extending DPO while compressing DSO is the core of working capital optimization. You collect faster than you pay out — and the gap between the two is free financing.

If your DIO is 50 days, your DSO is 55 days, and your DPO is 30 days, your CCC is 75 days. Every unit of product requires 75 days of working capital from the moment you pay your supplier to the moment your customer pays you. That is a significant cash requirement for a growing brand.

The lever most brands ignore: negotiate extended payment terms with suppliers. Moving DPO from 30 to 45 days on a €200K annual COGS frees approximately €8,200 of permanent working capital. The conversation with your supplier is straightforward — offer something in return: volume commitment, earlier order placement, or payment certainty. Suppliers prefer reliable customers with slightly longer terms to unreliable customers who pay quickly but erratically.

2. Invoicing Speed: Why Same-Day Invoicing After Delivery Matters

This point sounds obvious. It is not practiced. Vilna Gaon audits the billing processes of every brand we work with, and the single most common finding is invoice latency: brands that deliver on a Tuesday and send the invoice on Friday, or Monday, or "when the office admin gets to it." In a net-60 environment, a four-day invoicing delay means your actual payment terms are net-64. Over 100 deliveries per year, that is 400 additional days of receivables — more than a full year of unnecessary DSO inflation.

The operational standard: invoice the same business day as confirmed delivery. Not when the goods are shipped — when delivery is confirmed and accepted. The trigger for the invoice is the delivery acceptance confirmation (proof of delivery, signed delivery note, or EDI functional acknowledgement from the retailer's DC).

Practical implementation steps:

• Configure your ERP or accounting software to generate draft invoices automatically on shipment, ready to send upon delivery confirmation
• Train your logistics team to send delivery confirmations to the finance team the same day, not in a weekly batch
• For retail deliveries with EDI: configure automatic invoice generation on receipt of the 856 functional acknowledgement
• Set a firm rule: no invoice older than 24 hours from confirmed delivery date. Flag exceptions for review.

3. Early Payment Discounts (2/10 Net 30): When They Make Sense for SMBs

An early payment discount of 2/10 net 30 offers the buyer a 2% discount if they pay within 10 days instead of 30. From the buyer's perspective, this is equivalent to an annualized return of approximately 36% — which is why large retailers almost never offer it to their suppliers and why buyers love it when suppliers offer it to them.

For a Belgian SMB brand, offering early payment discounts makes sense in specific situations:

• Distributors and independent retailers (not the major chains, who have fixed payment terms by contract) — early payment terms can genuinely accelerate your cash cycle by 20–30 days with the right partner
• DTC and online resellers where payment terms are not fixed — a 1–2% incentive for immediate payment is often accepted and dramatically simplifies your collections process
• New accounts during the trial period — offering early payment terms in the first three months of a relationship reduces your exposure while establishing payment behavior

The math to do before offering: if your cost of working capital (overdraft rate, factoring rate, or opportunity cost) exceeds the discount percentage, early payment discounts improve your cash position. If your overdraft costs you 6% annually and you offer 2% for payment in 10 days instead of 60, the effective annual cost of the discount is 14.6% — more expensive than your overdraft. In that case, factoring may be a better instrument. Do the math per customer before making terms a standard offer.

4. Dispute Management: Preventing Compliance Deductions Upstream

The number one cause of delayed payment in Belgian retail supply is not slow payers. It is compliance deductions — automatic deductions applied by retailers when an invoice is disputed due to a delivery discrepancy. The retailer's DC system flags a shortage, a labeling error, a wrong batch code, or a pallet format non-conformity. The buyer's accounts payable team puts the invoice on hold pending resolution. Meanwhile, your net-60 clock has stopped and your finance team doesn't know it yet.

The three most common deduction triggers in Belgian retail:

Label Non-Conformity

Product labels that do not meet the retailer's specific requirements — language requirements (French/Dutch/German), font size for allergen information, GS1 barcode placement, promotional price stickers on shelf-ready packaging when the promotion has ended. Prevention: maintain a label compliance checklist per retail chain and validate against it before every production run.

Pallet and Carton Format Errors

Retailers specify exact pallet configurations: number of layers, units per layer, total carton count, and weight limits. A pallet that arrives with 11 layers when 10 are specified is a compliance failure. So is a mixed-SKU pallet when mono-SKU was specified. Prevention: laminate the DC-specific pallet specifications for every retail partner and make them part of the pick-and-pack checklist covered in Part 3 of this series.

Quantity Short-Deliveries

A confirmed order for 48 units arrives with 44 (4 units damaged in transit, removed before delivery). The retailer deducts 4 units from your invoice — often at retail price rather than cost price — and puts the balance on hold pending a credit note for the units you owe. Prevention: notify the buyer proactively before delivery if a confirmed order will be short. An early notification is handled administratively. A surprise short delivery triggers the automated deduction process.

5. Collection Cadence: The 3-Touch Follow-Up Sequence

Most Belgian SMB brand operators follow up on overdue invoices the way they follow up on sales leads: inconsistently, infrequently, and with vague messages that are easy to ignore. The collection cadence that works — without damaging retailer or distributor relationships — is structured, professional, and predictable.

For invoices on standard payment terms (net-30, net-45, or net-60), the three-touch sequence starts at the due date, not before. Chasing invoices before they are due creates friction. After the due date, speed matters.

What the three-touch sequence does not include: apologetic language, excessive flexibility on the due date, offers to waive interest before they are even requested, or escalation through the commercial relationship before AP has been given adequate opportunity to process the payment. Mixing the commercial and financial relationship is the most common mistake Belgian brand operators make in collections — and it produces the worst outcomes.

If an invoice remains unpaid after the third touch, you are in dispute or credit management territory, which requires a different playbook depending on the account size and strategic importance.

Next Step

The billing and payment cycle is the final stage of the CCC, and it is where the financial discipline of a brand becomes visible. How quickly you invoice, how rigorously you track disputes, and how professionally you collect tells us as much about a brand's operational maturity as its P&L.

Vilna Gaon evaluates every acquisition target's full cash conversion cycle — not just the top-line revenue. We are looking for well-run brands where we can add distribution scale and operational leverage, and for brands that are underperforming on CCC management where we can apply our operational playbook to unlock working capital quickly.

If you run a Belgian FMCG or CPG brand and are considering your exit or a strategic partnership, let's have a direct, numbers-based conversation. No pitch decks required — just your last two years of accounts.