Let's Talk Terms: What Every Retailer Should Know About Vendor Credit, Cash Flow, and Negotiations
When you place an order, there's often a third party you never see: the factor.
Factors approve your credit, set your limits, and shape the terms your vendors are able to offer — and most retailers have never had the chance to ask how any of it actually works. In this session, Christina Langbort of Hilldun Corporation pulls back the curtain. Since 1958, Hilldun has financed brands from Tommy Hilfiger and Marc Jacobs to Golden Goose and Amiri, which gives Christina a rare view of both sides of the table: what brands are managing behind the scenes, what retailers are asking for, and where the two keep missing each other.
We'll get practical about which terms are worth negotiating in today's market, why your credit limit is what it is and what actually moves it, and how communication with your vendors translates into real dollars. Then we'll step back and talk about the state of the industry: inventory, cash flow, and what both retailers and brands can do to build healthier, more sustainable businesses.
You'll learn:
What a factor does, who they answer to, and how their decisions land on your open-to-buy
Which terms are realistically negotiable right now (e.g. dating, discounts, limits, deposits) and how to ask
Why a vendor said no, and what to change before you ask again
How your payment history and communication habits are read on the other side
What Christina is seeing across fashion, CPG, and wellness heading into next year
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Indie Insights Live:
“Let's Talk Terms: What Every Retailer Should Know About Vendor Credit, Cash Flow, and Negotiations”
Vendor credit, net terms, and retailer negotiations with Christina Langbort. Hosted by Dane Cohen.
Dane Cohen: Hello, and welcome back after a week hiatus. We are back with Indie Insights Live, and today, I'm joined by a special guest and a very dear friend in the industry, Christina Langbort, and Christina is from Hilden, so we're gonna get a really interesting perspective today, and I think we're gonna get a perspective from the vendor side of this whole piece, and we're gonna learn about a kind of piece of the industry that is really the engine of the industry, that sometimes doesn't get the spotlight or the recognition it deserves, but nonetheless is essential and critically important to how every retailer, every vendor runs their day-to-day operations. So, Christina, welcome. Thank you for being here today.
Christina Langbort: Dave, thank you so much for having me. You and I have known each other for far too long, I think at least over 10 years, maybe even longer.
Dane Cohen: Way over… way over 10, let's be honest. Okay, fine, 5.
Christina Langbort: Trying to, you know, keep it a little bit… less than… do not date ourselves. But anyways, I'm really especially happy that we finally get to have this conversation in front of your community. I think it's incredible that you've created this podcast, and I'm really grateful to be on it.
Dane Cohen: Yeah, well, let's first start. You know, to many people, Hilden is one of the biggest names in the industry, most important, but like I said, it's a little bit behind the scenes, right? So, why don't you give us just a little bit of a description about the company, what you guys do, and why you're so Critical to this industry.
Christina Langbort: Yeah, that's a great start. So, over the years, we've both really watched the industry, I would say, go through enormous changes. We've seen periods of tremendous growth and disruption, and certainly changes in how retailers buy, and changes in how brands sell, and how businesses really exist in this global world. So I think it's a really important moment to talk about both the retailers and the brands and what they might be facing. So, for anybody who doesn't know me, I'm Christina Langbort. I oversee global business development for Hilden Corporation. I joined Hilden in 2007, so I'm coming up on 19 years at Hilden, and I often say that I grew up professionally inside the industry because I learned, really, the fashion and the business side, the fashion business and the financial side at the same time. So, I feel that it gives me an, you know, an unusual perspective, because I'm constantly speaking with brands, retailers, showrooms, manufacturers, and then, of course, industry partners across the globe. So, you know, Hilven is a very unique company. We see orders that are being written where retailers perhaps are becoming a bit more cautious. payment delays and, you know, a number of things. So, I think that it's a really important reminder that the creativity side and the financial health of a company, both in the retailer and the brand, really are not separate things. You know, a brand can have an extraordinary product, and a really great book of orders, but if they can't finance their business, the production, the cash flow constraints that we often see, then it's not a viable business. I would say at the same time, retailers also need financially healthy brands. as they're receiving product in. So they need brands that can produce consistently, deliver on time, stand behind their product, and really invest in the relationship as a partner. So the financial health of brands and retailers are both connected, and so I think, you know, it's something that we can really unpack today.
Dane Cohen: Yeah, so Hilden Corporation, right? And just to give a little bit more of a direct view into what you guys do, what you would more traditionally think of as a factor, right? And so, tell us a little bit about your direct role with brands, because really, you know, when we think about some of the biggest brands and how, you know, we often think about the creativity and this great product, but really, brands are built with your support. So how does Hilden Corporation, you know, what does that relationship with vendors look like?
Christina Langbort: Sure. So Hilden has been financing fashion consumer product businesses since about 1958. It's been around before that, but that's when we really started entering into the space. We are a factoring and a finance company, and I know that that word, factor, can sound complicated or intimidating, especially to people that are not really familiar with it, and perhaps even to retailers that don't necessarily have a lot of exposure to what we do. I would say that the easiest way to explain it is to you know, take it very simple and start with the timing of a wholesale transaction, right? So for many retailers, the first, like, introduction to a factor might be an instruction on invoice. Right? You might have a… there's a legend on invoices to brands that say, remit payment to factor, rather than directly to the brand. So, no one may have explained why, and the instruction to pay the factor does not signal distress for a brand or anything, it just usually means that the brand has assigned the receivable to the factor under its factoring arrangement, and that the factor is then administering the payment and financing according to the agreement that they have with the brand. So, a brand designs, produces, and such, and Often, as you know, they have to pay for materials or production and so forth, their freight, their duties, any expenses that might come up prior to the product actually reaching the retailer. And then the retailer purchases the merchandise often on terms, right? Net terms. So, it could mean something like net 30, net 60, or sometimes even prepayment. It just really depends on the agreement that the brand has with the retailer. The brand has then made a sale and created that receivable, but it hasn't collected the cash. So, essentially. that timing gap is where Factor can come in and be very helpful to a brand. Not only as the legend says, you know, this invoice is now payable to Factor, but the brand is now able to get access to their money at the moment of shipping.
Dane Cohen: the moment, right? So think about it almost like a financial insurance plan for a brand, right? They have the backing of your corporation so that they can go out and do business, because I think what we sometimes forget is, right, that a retailer is going, and they're placing an order. Maybe they're paying on credit card, maybe they have net terms, but the brand has to invest in that supply chain dating way far back, right? So they're making investments in the product and the design and the manufacturing, that by the time it gets to that wholesale appointment, right, they've already had a lot of payment behind them, so they need that, you know, backing to support those gaps, right? Absolutely.
Christina Langbort: Absolutely, absolutely. And I mean, Hilden, you know, in general, a factor, can also provide purchase order financing. So it doesn't even have to be at the start of when the brand ships the product to the retailer, and now you have that gap in time from when they ship to when they're paid. There's that period of time where you receive the order after a sales market. The retailer's place the order, and now the brand needs money to finance the order. So the factor can also, you know, be very influential in that respect. As I mentioned, the factor is not there because of any… distress or failure from the brand side. They're generally part of, like, an infrastructure that's helping the brand to succeed, put in disciplines, finance growth, limit their credit risk and exposure to Retailers around the globe. And then from the brand, from the retailer side, the factor is… Often what might allow the brand to say, okay, we'll ship you with net 30 terms. Or not. Right.
Dane Cohen: And so this is, I think, really important, and where it kind of brings the retail community into this, because as someone who's been in this business a while, I've been on both the good side and the bad side of factors, right? And, you know, from…
Christina Langbort: Good.
Dane Cohen: No, but, you know, listen…
Christina Langbort: I know, I know.
Dane Cohen: There are some times, right, if… and this is to protect brands from retailers who maybe are defaulting on payments, right? Who are not, And so there's a built-in layer of protection. So, let's kind of, like, roll back for one second, though, right? Because I think that this is where I really want to focus in on the conversation today, and I think where the retailers here can really walk away with some great information. I think that there is a little bit, and you would be shocked. and the amount of retailers I speak to. Who are paying for everything on credit card. Right? And they want the points, they want, you know, there's obviously some… a lot of benefits of playing on credit card, but why are terms Why has that been such a tried-and-true method for retailers to build their business? Why are terms important for a retailer?
Christina Langbort: Yeah, I mean, we often hear that, right? Or even with the question, like, retailers ask, why should they establish vendor terms when they could just pay by the credit card? A credit card can be useful. Especially in the initial transaction, and then, of course, all the benefits that you've just mentioned, miles, and so forth. But really establishing that vendor credit can become a very strategic part of the retailer's long-term growth. So, you know, first, it preserves the retailer's credit card capacity for other business expenses, right? You do not have an unlimited credit line, or generally one does not have an unlimited credit line. I know there are some credit cards that exist that are unlimited, but that's generally not the case. If the retailer would otherwise carry some sort of a card balance, then the vendor terms may also, you know, cross over into interest that may have to be paid for the… credit card purchase that the retailer has made. You know, vendor credit also creates another source of, like, strong purchasing power. So, if you're a retailer that has strong credit. and a strong payment history, you'll have more freedom to place larger orders with brands, and to really grow your business without putting money out before you're actually seeing an ROI on your output, right? The card has, like I said, the existing credit line, it has… Payment terms of, like, 30 days, then you have to make payment, or you're, you know, you're going to have interest charges, perhaps. And it limits you from the perspective of your retail brand partners, because they don't necessarily know if you're somebody that can pay your bills, and if you can remain a viable partner in the future because of the limitations, I believe that the credit cards can potentially you know, bring. So, I think being creditworthy… oh, go ahead.
Dane Cohen: I was gonna say, so I think that this is the first really important part to me, right? And that is your credibility as a retail business, right? Because even if you can, let's just say you can pay with everything on credit card, and you're paying off your bills, and you're not accruing interest. Even still, right, there is going to be a time as you grow your business. Let's say you want to enter into a relationship with a larger brand, right? You know, maybe right now you're dealing with some smaller brands, you're going to trade shows, but you want to go and you want to work with a brand like Theory, or Vince, or a larger operation, or even in the luxury space. They're going to want to know that you have a credit history and a ability to pay your vendors, right? They… I mean, Hilden, right? You want to see that history, that you know that you're dealing with a credible retailer, so that when a major brand goes into a partnership, that everyone feels comfortable with that relationship.
Christina Langbort: Totally, totally. And, you know, when a new retailer comes to Hilden, we have to review the credit and the information that's available. There's an entire credit community within the factoring space, the insurance space, that underwrites the credit of a retail partner, and the only way that you can build credit, just as if you're an individual, which I know we've discussed in the past, is If you have credit. So, by getting credit from brands, large brands, like you mentioned Theory or Vince, that is a way… extending credit to the brand, and then getting paid. Paying the brand, rather, in an effective and efficient way is very important to establishing credit and growing your business with some of those larger partners, like you mentioned, who You know, want to do business with retailers that have established have established credit.
Dane Cohen: Right, and there's a lot of limitations, like you said, on paying with credit card, right? The first one being the credit limits, right? The second one, and I'm sure everyone on this call could relate to this, is credit fraud, credit card fraud, right? So, you know, you could get to market, you get charged, your card gets fraud, you know, you have many different cards you're managing, it could be a very… you know, treacherous process. And then again, you know, when you pay on terms, you have that gap where you get the ability to get an ROI on that before you actually have to pay the vendor. So, especially in a fashion business, right, where you're getting fresh product all the time, you want to get that product in, have a chance within 30 days to sell it, and then have to pay the vendor. Once you already have some cash back from that sale.
Christina Langbort: Yeah, and frankly, there are still risks with credit cards that we didn't mention. Certainly coming out of pocket from day one, having to prepay, I mean, retailers sometimes are carrying 10, 15, 20, 30 different brands and more, so to come out of pocket prior to a season before knowing, you know, how the product is going to perform is very limiting. And then there's also, you know, disputes and so forth that can come about, with credit cards, you know? Just because you… Pay with the credit card. you know, it's not a sure thing, is what I'm trying to say, and it's not a way to build a business of true partnership and growth, especially if you're planning to expand some some footprint, other than just your one, you know, one retail store that you may have. And certainly what I'm seeing in the retail space, a lot of the specialty boutiques are growing into multiple doors. Across the… across the country. So it's… It's interesting.
Dane Cohen: Right, so if you're expanding, if you're, let's say, going into new locations, you're obviously going to have to build that buy with your vendors, right? You're placing bigger orders, and the hope is, right, that in general, that your business is keeping, you know, keeps growing, and I think that… By creating these relationships, and this is what I want to talk about next, is the importance of that vendor-retailer relationship, right? Something that we talk about a lot. But, you know, we're not… great brands are not looking for retailers that do a one-off with them, right? A season here, a season there. They're looking for partners, and vice versa as well. So, you know, what's your kind of viewpoint on the importance of that? Vendor-Retailer relationship.
Christina Langbort: Yeah, well, I mean, that whole negotiation process between the vendor and the retailer is really very… important part of the entire relationship. The agreement between the wholesaler and the retailer needs to be sustainable for both sides, right? So, if a brand is requiring that the retailer pay everything up front at the onset, that doesn't necessarily feel fair. And if the retailer is, you know, giving terms that are not so conducive to a brand, net 45, net 60, I've seen even terms go up to net 90, that's not fair. I think it's important that the retailer negotiate terms that make the order, you know, both profitable, but fair on both sides. So, the brand could have issues with production, delivering, etc, if things are just so one-sided, because they're also running into their own cash flow issues. So. I think it's about, you know, coming up with some sort of a hybrid, and something that came to mind, is that Often, a brand may want some sort of a vested interest from the retail partner, which could come in the form of a prepayment. I don't like to say deposits because they don't get the deposit back, but if the retailer gives some sort of a prepayment, which could potentially be done on a credit card, right, so that 30% prepayment. And then the balance could go on terms. I think that that's one structure that I believe can be, you know, fair to both sides, especially when a retailer is new to a brand, or especially if they have an established like, sufficient credit, so it satisfies both sides, where the brand can get some sort of a prepayment showing that the retailer is, you know, vested in the product, and then the retailer can have a duration of time to actually receive the product and then ship. It shows really a mutual commitment, and And it also allows the retailer to then build its own internal credit. So, you know. By providing this prepayment. it just… I think it balances everything out, because it shows that both sides are really invested in… in the relationship.
Dane Cohen: Yeah, and you know, I was once… once upon a time, I was on the wholesaler side of the business, right? I was…
Christina Langbort: Yeah.
Dane Cohen: a sales director, you remember, at Helmut Lang for some time.
Christina Langbort: We would get…
Dane Cohen: Those were the good days. And then, you know, we would get new retailers, especially, right, that would come to us, or, you know, whether they were a new retailer or the first time doing business with us. And there's a lot of hesitation to just immediately engage in that relationship. And I think the biggest hesitation is two things, right? Distribution, right? Am I in a distribution area that maybe another one of my retailers is in, so I want to respect that distribution. And the other is. can this person actually pay for my goods? If they sit down with me and place a, you know. $10,000, $15,000 order, do I actually have knowledge that they can pay for that, right? And so… and that's where I think the balance comes in with working, you know, with that prepayment, right, is that you're showing some investment while not having to go all the way out of pocket for the entire order, right? Being able to say, hey, I'm gonna do a prepayment, and then, you know, let's do terms, you know, net 30 for the remainder of the shipment.
Christina Langbort: I love it, and I think, I don't think… I think the model exists in some respect as it relates to a lot of the European or Middle Eastern retailers. I think they're more inclined to go into some sort of a prepayment model with balanced net terms. I see that, you know, in terms of the payment terms that I see across the globe, but they don't necessarily pay with a credit card. But I think for the American market specifically. specifically because we are so, you know, point-driven, and we like benefits, and we like to just feel that we're getting something a little bit more for our money. The prepayment with credit card could be interesting, and certainly. you know, it would need to be worked on between the retailer and the brand on who pays processing and handling fees, of course, because then you also have that element that's factored into using a credit card. And whereas, you know, it's something that just came to me as well, from the retailer's side, getting terms also is like you don't pay interest. If you miss the day that the payment is due, if a retailer misses, let's say a payment is due net 30, and they pay net 40 or net 50, they're not being charged interest for that period of time that they've essentially missed their payment. Versus, if your credit card is due, you know, January 15th, and you pay January 30th, you've now accrued interest from the period of the 15th to the 30th, under a normal Non-zero-interest credit card or something like that.
Dane Cohen: Right, and then, you know, and this is the kind of, that I think sometimes that may be missed, like, let's say you have a cashback credit card that you're putting things on. And, you know, you think, okay, well, I'm getting the cash back, but you are also potentially, depending on how the brand or your relationship works, you may be getting hit with credit card processing fees, right?
Christina Langbort: Oh, yeah.
Dane Cohen: So, net terms really opens up a whole different world for a retailer, and again, I think it's a very underutilized, by a lot of retailers, especially independent and specialty retailers. So. First off, I do want to say, I see some people in the chat. If anyone has questions, I see Penny's here in Virginia Beach. Hi, Penny. Feel free to say hi, drop a question, for myself or Christina. This is why we bring it live to you, so that there are guest experts here that you can ask questions to, pick their brain, and get direct answers to some of the questions that you may have. I think that this is a complex topic, it's an often misunderstood topic, so this is a great opportunity, to kind of ping pong back and forth. So I will be in the chat, and I will be looking for any questions, and if you just want to say hi, you could also say hi. So, Christina, let's kind of…
Christina Langbort: I also just want to say, from all my global travel and so forth, I mean, the U.S. specialty stores are just… so amazing, and they do such a great job at supporting all, you know, both emerging and mid-sized businesses, and whenever I'm talking to European brands, or just any brands that are outside of the U.S, we always say the U.S. market is more than just, like, LA and New York. You have a whole You know, country of these specialty boutiques that really know who their customer is. And they curate experiences for their customers, and I would say they're very, you know, strong in terms of Credit these days, from what we've been seeing from our end, in terms of pay history and so forth?
Dane Cohen: Yeah, and our good friend Mark DENKLER from the National Shoe Retailers Association says, never put payments on a credit card if you cannot pay it off. a 1% to 2% rebate does not offset the 24% interest rates. And so, you know, again, these are things, especially if you're a little bit newer in your life cycle of a retail business, you know, interest rates are something that could really put a business under, right? You know, you're starting to put things on credit card, and you know, if you can't pay this off, if you have a slump in sales, right? Or for, you know, potentially an event that causes a store closure for a few days, right? Whatever that may be, and your sales aren't coming in, you could really get in a hole if interest rates keep piling up. So, just as you could get into personal debt, it's very easy to get into business debt, through this kind of model, and we don't want to see all your sales in the future just going back to repaying… debt repayments, right? That's not a great way to be…
Christina Langbort: Very true, and I think that hybrid model really can be helpful to a brand, because it allows them to establish some sort of credit where if they can satisfy, let's say, that 25% or 30% term business. Then they can grow that further, and if they want to have some element of their business that's on credit card, you know, maybe it's a 75-25, where it's 25 you do credit card, 75 you're actually getting terms from… from brands, because then it allows you to have more time with the product, selling it, and it… Safeguards you from those exposures that you just mentioned, which are real. The interest, expen… expenses and such.
Dane Cohen: And so Shaun says, I'm a smaller seasonal retailer, and I love the idea of prepayment and terms on balance.
Christina Langbort: Yeah.
Dane Cohen: 60-day terms help me immensely, but a lot of brands aren't willing to do that. So, here's a great question, and I'm sure you've seen, you know, over the years, a good amount of negotiation on this front. How should a retailer, especially a smaller retailer, would you have any tips on how they should actually be talking to a vendor about terms, like, what is that initial conversation? Like, let's… let's go to, like, a kind of a… I like to say a third grade level, right? What are they actually asking for in that buying appointment?
Christina Langbort: Yeah, I mean, I think going into it. really with… I think every meeting you go into, it's all, like, the mindset that you're going into the meeting, right? So, going into it from a retailer's perspective, whether you're a small, mid-size, or, you know, a larger retailer, it should really be viewed as, like, partnership and collaboration, and seeing from the other side some of the, you know, challenges that they may have. So, if you're working together as, you know, a partnership. going into these conversations, I would say that you're really committed and interested in growing with the brand, and offering some sort of a… hybrid model, like we spoke about, where, you know, maybe it's not even a 30%, maybe it's a 10%, maybe it's a 20%, something where the retailer shows the brand that they're truly committed to the relationship and the partnership. I think the retailer would find that the brand is more open to taking that risk of net 60 days, let's say, because there was an initial investment from the retailer, that shows that they are committed, because, you know, that's why we always advise against consignment, let's say, to brands. Now, consignment… I'm not talking about shop within shops. I'm talking about if the brand just says, we'll take your product on SOR consignment, because the truth is there's no real, need for the brand to even take the product out of the boxes, so you don't necessarily even know if your product is being well represented. So… consignment or something of that sort does not show a mutual partnership, and it could be detrimental to the brand. So, if you are showing the brand that you're actually vested in the, you know, transaction, and you're willing to give money up front, maybe not 100%, Which, you know, as a new brand, sometimes they require you give that, but if you're, let's say. starting out 10, 20, 30, 40% deposit, I think they'd be more inclined, because that at least covers the cost of the brands cost of goods, or at least it should. At least they should be at, like, a 50% margin or something like that.
Dane Cohen: Yeah, and I think so. What I'm hearing, and I think that this is really important, is that a retailer should feel empowered to ask for these things, right? And to start these discussions. Like, you don't have to walk into a first-time appointment, or working with a vendor, and just assume that you, hey, I just have to put this on credit card, right? I have no choice, I have no agency in this. dynamic or relationship. Like, you should be able to go in and ask for something. Like, the worst that they can say is no. Right? And then maybe that's not the right, brand partner for you. And then… so, I have a question on the other end of this, right? What about an established retailer that's taking a risk on a new brand, right? And then the inverse happens. What if that brand can't actually deliver, right? I'm, you know, this is a smaller brand, I'm a more established retailer, I'm a specialty retailer, and I'm engaging in a relationship with an up-and-coming brand. What is the protections that exist on that end?
Christina Langbort: That's a great question, and unfortunately, there's not a lot of protection that can be given to the retailer. I think that's been some of the apprehension with retailers in looking at new brands, because they want to see that a brand is viable and can show up season after season. Certainly at the department level, department store level, they want to see that a brand is consistent, they have a point of view, they're designing a collection that's you know, cohesive from one season to the next, and they're showing up. That's very important. But from a protection standpoint, there's nothing that a retailer can really do to safeguard themselves. And certainly, that's probably why they… They need to really have a good relationship with the brand if they're going to give some sort of a deposit or a prepayment at the beginning, because they do take that risk and have that exposure as well if the retail… if the brand perhaps doesn't go into production, or… has a financial inability to continue forward, it exposes the retailer from not only the prepayment that they gave, but also the, not having product in the store. And, you know, the way that a retailer, survives is through inventory.
Dane Cohen: Yeah, and so I have a question here from Michael. He says, I'm part of a mature retail operation, and we regularly have positive cash flow. Do you see any vendors willing to give extra discount for early payment, As opposed to net terms, and potentially getting paid beyond those terms.
Christina Langbort: That's a great question, and I always say it's just always important to ask, because yes, that does exist, you know, net… 10, you know, if you pay within a certain period of time, you'll get a particular discount. So, I think any time that you're showing that you could potentially be helping your partner, you know, your brand partner. They're always open to conversations like that. So, for a retailer that's in a healthy cash position. that may have the ability to pay a little bit sooner than when the receivable comes due, I think would be advantageous to any brand who would probably love to hear that, because also on the brand side, some are self-financed, and then some work with Hilden. I think I may have mentioned at the beginning, I don't know if I did or I didn't, I can't remember at this point, but 50% of our brands work with us exclusively for credit risk management, so they're not borrowing money from us, and then we have, let's say, another 50% that are actually borrowing money from the day that they ship and assign the invoices, they're taking in advance to get their money quicker. So, if they could have access to that money. from the brand, I'm sure they would give up, you know, some discount to the brand, and certainly it would solidify the partnership. So I think it's a great, great thought, and, worth the conversation.
Dane Cohen: Yeah, and, you know, Butch Blum is on the call. He's a veteran, retailer, had an incredible business over on the West Coast menswear store, and he said that used to be called Anticipation. So that's an old-school retail term. And another old-school retail term, when we were talking about consignment, we used to call it putting it on wheels, putting product on wheels, right? So…
Christina Langbort: I love it! Well, yeah, and in the United Kingdom, they say SOR, you know, seller return.
Dane Cohen: And you know what? Again, I think that through the years, some of these conversations have been lost a little bit, right? Especially with, you know, newer stores, they sometimes don't know what to ask for, right? And I said this.
Christina Langbort: And we should create a whole guide or something like that, just as you're launching into the business world, you know, these rudimentary topics that have somehow gotten lost along the way.
Dane Cohen: Yeah, and I think what's really gotten lost is the kind of attitude, and I think you talked about this, I talked about it, of a retailer, you know, retailers at the end of the food chain, right? The product's getting manufactured, the wholesale, you know, the wholesalers are selling it, but at the end of the day, the retailer assumes the end risk with that product. And so, when you're going into negotiations, you have to stand up for yourself. You have to ask for the things that you need in your business, and not just rely on a brand saying, hey, do you want net 60 terms? That's probably not going to happen, so you have to be your own advocate.
Christina Langbort: Absolutely.
Dane Cohen: Absolutely. Okay, Matt Lucas says, what about freight and shipping? How are… how's that handled in these conversations?
Christina Langbort: That's… that's a good question. I mean, generally, the freight and shipping is handled by the retailer. But sometimes it's handled by the brand. It really is just the discussion between the two. you know, between the two parties and what they've agreed to. We always tell our brands, from a credit perspective, To always increase the amount that they're looking to get approved. to include the freight and shipping, we can cover that, too. I mean, it's generally very negotiable, and it's based on, you know, the retailer and the brand, and what the purchase order said at the onset, so it could involve your sales agent, or, you know, whatever was initially agreed to.
Dane Cohen: Yeah.
Christina Langbort: answer. But I think it goes back to your point of having a discussion and just, you know, keeping lines of communication open and setting expectations, very clearly.
Dane Cohen: Yeah, and I think that this, again, goes to, and when we're talking about those, you know, initial, kind of more rudimentary elements of these conversations, is that brand, retailers have to be very specific on their purchase orders, right? And make sure that these… You know, the purchase orders that they're writing for… to their brands and their wholesalers, have this all really mapped out, right? Especially, let's think of something as simple as, like, shipping windows, right? If a brand ships outside of that delivery window, a retailer has to have that in writing, right? What happens at that point? Do they get those goods on a discount? Are they able to refuse it? So when you go into these relationships, again, I think it's protecting yourself and having the right infrastructure that ultimately protects you and still allows you to be a great, partner to your vendors.
Christina Langbort: I mean, delivery windows are very critical, I would say, in the entire negotiation process, so both parties should absolutely agree, like, when the merchandise is expected. what flexibility there might be in case, you know, you miss a shipping window, what circumstances can one cancel? And if they arrive too late, does it create, you know, a real problem for the retailer that would warrant some sort of a deduction. I really just think both sides should understand very clearly from you know, start to conclusion, and what really is acceptable in different scenarios, and to discuss it before you even go into production, just to avoid any type of, like. disruptions.
Dane Cohen: Yeah, and so Michael, and I think that this is a good, you know, it's kind of a statement, but I think we could riff on this a little bit. He says, if you have positive cash flow and are committed to never paying credit card interest, nor credit card transaction fees from the wholesaler. He recommends always paying with credit card and getting the cash back. he gets about 1.5% back on his Amex Platinum. Last year, we paid $1.5 million with the Amex card and received $22,000 back. I think the caveat here is. you know, that you have the cash flow, are committed to never paying credit card interest, and can get the transaction fees. That's a tall order for a lot of retailers.
Christina Langbort: Listen, I'm not opposed to it, if you… if, if, if, if, if, you know? If you have the discipline in place, if you're confident in your sell-throughs, and you're operating your business so, you know, micro-efficiently, and you know what your risk tolerance is. It can be… it can be a great form of cash back and, you know. maybe even upgrades on your travel. So I'm not absolutely opposed to it, but I think if you're going to be growing maybe further than a $1.5 million business, then, you know. it could be helpful to do a blend of both, because you might be a little bit more limited as you grow to higher thresholds. And by the way, maybe the retailer is comfortable at that level, so it works. I guess it's just based on the… Individual retailer, and what works best for them.
Dane Cohen: Yeah, and I think there's an emphasis here, right? That… You know, terms are a really great way for a retailer to grow. Right? And so, you know, you're trying to take it to that next level. Maybe you're opening a new store, maybe you're expanding within your own store, or maybe you're just, you know, really looking to get more aggressive in your buys and see if that can expand your business. Net terms really allow you to take those chances without being… You know, again, getting yourself into a situation where credit card interest payments and you know, not getting those processing fees covered could end up really hurting you. So I think that there's a really nice blend of both, which we've been talking about. And this is where I also think, right, credit cards are great for mediates, right? When you need immediate goods, that's a great way to really rack up those.
Christina Langbort: And to blend, yeah, to blend it, you know? I mean, the most obvious payment terms are your net 30, net 60. I mean, I know some larger retailers are even at net 45, and have gone up to net 90. But, you know, retailers naturally want enough time to get product in. Right. Get it on the floor, start selling it before the payment is due, under an ideal situation, even if you are very efficient and diligent in your payments. and you were able to do the $1.5 million, which, congratulations to that retailer that they have no credit card and such, interest, and that they've built a successful brand. But, you know. Retailers want time to sell. Brands want to be paid as quickly as possible, because they've already funded the product from so many months before. Right? And so, the longest possible payment term for them is not the best agreement, so they do want to be paid up front, but, they understand that most retailers are not going to be as accommodating and say, hey, you know, we'll pay you up front with credit card. So… you know, it… I just think both parties have to be really clear about when the payment terms begin, and And… How it all shakes out.
Dane Cohen: Yeah, and to give credit to our friend Michael, he's saying that he put $1.5 million on his Amex, so the business is probably much larger than…
Christina Langbort: Yeah, yeah, yeah. Oh, that's fantastic. No, I think that's incredible, and I said kudos to him. I mean, that's great. I love it.
Dane Cohen: Absolutely.
Christina Langbort: I would probably do… I would do a hybrid mix as well if I were a retailer paying, because I'm definitely someone who likes to see those benefits.
Dane Cohen: But listen, you better have either a great bookkeeper, a great controller, a great CFO, or you better.
Christina Langbort: How about a great salesperson in the store?
Dane Cohen: had a great salesperson in the store, who's getting it and selling? And that's why, I mean, this is, you know, kind of another part of this conversation, which there is nothing that drives me crazier. than retailers that hold back goods, right? They're waiting till a transition in season, and they're getting new arrivals, and they're holding it in the back, like… you know, I come from, again, that re… you know, old-school retail mentality, where you get it out, you unpack it, you get it on the floor, like, as soon as you can. You could be unpacking it right on the floor and getting it out that day, because again, this kind of feeds that whole life cycle, right? So if you're paying on credit card, those goods better be out the day that they land in your store.
Christina Langbort: That was the whole issue, you know, we had a retailer that everyone's aware of recently, at the beginning of the year, Saks Global, at the time. And part of the issue that they were facing during that transitional period when, you know, Amazon stepped in and Neiman's and Saks merged together, was they weren't getting the product in at the start of the shipping window as early as, you know, you needed to. So, if brands were not shipping at the start of the shipping window because of payment concerns and issues, and now they're getting it towards the end of the shipping window, less time on the selling floor. means your customer's gonna go buy somewhere else. So, it's exactly true what you're saying. You get the product in, and you get it out of the store, or on the floor, as quickly as possible. So important.
Dane Cohen: And by the way, this is another, you know, for Management One clients, you know, Christina, I know we probably haven't gone that deep into this, but we, you know, really seriously track on order.
Christina Langbort: Right?
Dane Cohen: how much a retailer has on order. And so, this is another thing about being your own advocate. If you're in that front of the shipping window and you need those goods, get on the phone with your vendors. Get on the phone, right? You're building that relationship. If you need goods, and you don't want to land it later in the shipping window, and let's say you have paid on credit card, if you have terms, whatever it may be, get on the phone and land the goods that you need, right? The squeaky… the squeaky wheel, right? That's the group.
Christina Langbort: We say that all the time. And something else they say, if you don't open your mouth, you don't eat.
Dane Cohen: I lo- I like that.
Christina Langbort: I love it.
Dane Cohen: I like that. Nico, that's… that's the… that may be the quote of the, of the…
Christina Langbort: Oh, I love it. My husband will get a kick out of that. I always say that all the time. He said, you know, you've taught me and my parents so much. And I said, well, you know, you have to ask.
Dane Cohen: You have to ask, you have to ask. Okay, now, I have a question for you. Listen, we gotta talk about it. What if a retailer ends up… well, two questions. How does a retailer sometimes end up on the naughty list? And then, how do they get off that naughty list? Can you explain that a little bit?
Christina Langbort: Yeah, of course. Well, in simple terms, they… They pay on time, they pay what's expected, they communicate well, etc. Obviously, we at Hilda never want to be viewed as somebody who is, like, a collection agency, or somebody who doesn't understand, really, both sides. So we're on the side of the retailer, and we're on the side of the brand as well, and we understand that everybody faces cash flow issues. But I think what can really cause downturn is, of course. Bounced payments, you know, wires that bounce or checks the bounce. Lack of communication. I think just keeping those lines of communication open are very important, and as I mentioned, within the factoring and insurance community, there's, like, a database of retailers. I mean, we personally touch about 6,500 retailers across the globe, so we've got insight and access to all the different retailers. From their payment history to financials, and, you know, we really… We really work with retailers when they're having issues, so long as they're being communicative and, and open to, you know. making plans with the brands, so…
Dane Cohen: And I've been in situations, right, where sometimes if you are having that sticky situation, you know, you work with your vendors and you say, hey, I'm gonna pay it down in this, you know, this cadence, or, you know, again, I think this kind of goes to, showing you know, some in… kind of showing a form of partnership there, right? By an investment or a… not what we would call a down payment, but, you know, that… an initial payment, like, hey, I'm having a little bit of cash flow issues, here's what I can do right now, right? I really need these goods, here's what I can do right now, you know, we'll kind of get you the rest and work out a little bit of a cadence.
Christina Langbort: Yeah, absolutely. I think when everybody's just working as a team for the greater good, and when those lines of communication stay open, it's much easier to keep everybody in good, you know, positive, view. It's just when… They get on a naughty list when they do naughty things.
Dane Cohen: And listen, this is where retailers have to have good business interruption insurance and, you know, other kind of protecting factors in place. Okay, we have another question.
Christina Langbort: Sure.
Dane Cohen: It's a big one, so give me a minute to read it.
Christina Langbort: Yes.
Dane Cohen: I see retailers having wholesalers using their own shipping account number for freight billing, instead of having the wholesaler pass on the freight to the retailer. I sense that some wholesalers may pad the freight bill, and also believe they don't necessarily negotiate better shipping rates with their carriers, because they may not care enough because they're passing on the bill to the retailer.
Christina Langbort: Hmm, that's an interesting question, yeah. And it's very possible. Yeah.
Dane Cohen: And, and so…
Christina Langbort: It's just like credit card up charges, right? I mean, there's, you know, whether it's a Visa, Amex, MasterCard, Discover, there's different percentages, so it all depends on what the… brand negotiates with those parties, so it applies the same to your logistics, and so forth. I don't have actual facts to know whether or not somebody is you know, not negotiating the best terms or not, but it's very possible that that could be the case. And again, if it's something that the retailer is… feeling, you know, maybe it's just worth a conversation, or, you know, maybe if the retailer has a better rate of, rate exchange with their, logistics. Maybe you switch it around or something like that, just to make sure you're getting the best deal possible as a thought.
Dane Cohen: And again, this is where those relationships come into play, right? The longer you've been working with a brand, the more of a relationship you have. You know, just, I've been in this situation before, and if you have great negotiation power with your shipping, handling, and freight carriers, then pay the freight yourself, put it on your account, and ask the wholesaler, hey, can I get a 5% discount?
Christina Langbort: Yeah.
Dane Cohen: I get a 5-10% discount, so that you're not asking for the free freight if you think that they're padding it. You put that on your account, which you're negotiating hard for, and after a good relationship, good payments, then you could ask your vendor, hey, I want to, you know, do a 5% if I'm… and again, they want you to grow their business. I'm going to grow my business with you, I want to… buy more, can you help me out by… you know, helping me with a discount on… on orders. And again, what's the expression? The open…
Christina Langbort: If you don't open your mouth, you don't eat.
Dane Cohen: That's it, I love it.
Christina Langbort: No, it's very true, Dane. It's such a good point that you make, and sometimes, again, it just goes back to those rudimentary thought processes on just having the conversation, thinking about things really from a, like, logical and reasonable way, and then making, you know, approaching your Partner, which in this case is the brand, and trying to come to the best resolution for both sides.
Dane Cohen: Yeah. Christiane, this is so much incredible information, and I think that these are the types of conversations that I don't often think are had, or, you know, sometimes retailers are thinking about these things and processing things through a vacuum, so it's really good to have these conversations open and, you know, kind of an open exchange on them. So, I'm gonna shift gears a little bit, because I've known you for quite some time, and, you know, if there's one thing about Christina, she is at every event, you know, across the globe, seeing the industry in, you know, when I think of a mover and shaker and someone that, you know, knows so many sides of this business, it's you. So, two questions here as we kind of wrap up. The first being, you know, have you kind of seen a big shift with with the tariffs, with supply chain issues, have you seen a major, you know, with SACS, you know, the kind of whole SACS debacle, have you seen a real shift in the industry over the last few years? How has that kind of impacted all of these topics and discussions?
Christina Langbort: Yeah, I mean, I would definitely say that the tariff discussion was something that was big from, you know, when we had the Liberation Day and so forth. I think it was more of a broad… the retailers were looking at things more from a broad lens. now that we have a little bit tighter view on things, where, let's say, Mexico, Canadian, EU production, we can… that's balanced out a bit. It's more still Asia that we're a little bit uncertain about, but it's given retailers a little bit more comfort to know how to anticipate Charges and so forth. I'd say that, you know, one thing I'm seeing a lot lately is resale. It's becoming a big.
Dane Cohen: You know, topic.
Christina Langbort: conversation. I don't think it's necessarily a secondary market, even seeing retailers across the globe that have some sort of a subsection within their store that has you know, curated, maybe even a higher-end retail product, likely on a concession-type basis, and a little bit separate to what their regular store is, because… people are buying things, you know, that are vintage, or not even vintage, that are just really good quality secondhand. I know, particularly in the children's space, you know, sometimes you buy something for your child, it's worn one or two times, and it's, like, brand new, and now you're stuck with all this gorgeous stuff. You could give it away, or you could resell it. So I think the resale, resale is becoming a big part of, you know, business, and then, of course, I would say wellness, beauty, etc, and… Yeah. I think a really important thing to leave the conversation with is just the retailers set the tone by the environment that they create for the customer. They are, you know, curating a space. There's so many options out there for people to just buy online, to not have to leave, but if you create a really nice experience for a shopper, I think you'll get you know, you'll get them back time and time again, because people still like to have human connection and really good service. So, I think just more strategic growth is happening across the board, rather than just growth at any cost.
Dane Cohen: Yeah, so my takeaway is, you know, especially for Management One clients, you know, our main goal is to create healthy cash flow for retailers. So, you know, and really allows you to focus your buys, hone in on the product that you need. You know, I think creating great relationships with vendors never goes out of style. Asking for what you need to help your business and being your own advocate, you know, that's my kind of takeaways from this conversation. Well, listen, this was just such a fantastic, insightful, informative conversation. I knew we could always rely on you for that, so we're getting a lot of thank yous in the Thank you all.
Christina Langbort: Yeah.
Dane Cohen: Thank you. And we gotta work on that. I love that idea of putting together a guide, so…
Christina Langbort: Together.
Dane Cohen: We'll get started on that.
Christina Langbort: We certainly have had the experience, and we could provide valuable information to the globe.
Dane Cohen: Yeah, well, thank you so much. It was so great being joined by you, and again, just a bunch of thank yous from our, listeners and our attendees in the comments, and Christina will be speaking to you really soon.
Christina Langbort: Thank you so much for giving me the opportunity, and I wish you all the best of luck.
Dane Cohen: Okay, thanks, Christina. See ya, everyone, on next week's Indy Insights Live.