Since we started Nordic Approach, we’ve tried to bring roasters along with us into the confusing and complicated world of sourcing green coffee. One of the most important but least-talked-about subjects is: $$$$$$$$$, in this case meaning financing.
We have coffees landed in our warehouses available for purchase by any roaster, as little as 1 bag at a time. Up through 2016, we always operated on payment-up-front terms and repeatedly said that we couldn’t finance coffees. We needed every sale to go through ASAP so we could pay for the incoming containers, since we pay for most coffees on FOB terms (where we have to pay for them before they arrive).
It’s a familiar story to roasters — you have the same pool of money to buy green coffee, pay rent and staff and expenses, invest in machines and systems, etc. Except you also mostly offer 30 day terms to your wholesale customers! So for our first years it was a cash squeeze for us and for you. We know some people couldn’t buy from us due to our inability to give terms or hold coffees. I told people many times that we were working on a solution.
Well, we let everyone know earlier this year that we can now start offering 30 day payment terms (Net 30) to existing customers in Europe and US/Canada. This means that, if you are up to date on your bills and you’ve bought from us more than 3 times, we will give you 30 day payment terms on your invoices.
The other improvement is that we will be able to keep coffees in reserve for you for longer. You can reserve coffees just like normal, and you can always draw them down within 30 days for free (so for many people nothing will change). Otherwise, we can hold reservations for up to 3-6 months (depending on the harvest period and freshness). We will charge 1.5% per month after the initial 30 day free period.
Remember, this is a service — the financing that allows us to hold these coffees costs money, and we have to charge for it. The goal, like with everything we do, is to be easy, fair, and transparent. We’re not a bank (not by a long shot!) and we do not aim to make money on this service, just to cover our costs for this service so that we can buy more great coffee and find good homes for it with roasters around the world.
To make this clear and easy, we will include financing on every invoice from today, October 9, 2017. It will be added as a surcharge just like freight on the bottom-right of our invoice. Every time we issue an invoice for a customer, we’ll calculate what financing (if any) has been incurred and add it on. We can show our math as well — we will only calculate from the date of reservation OR the date of arrival of the coffee, whichever is latest. So for those of you who like to plan and secure coffees before they arrive, you’ll be able to continue to do so with confidence. And we are open to including some months of financing into the price of pre-booked coffees so you can lock in what you will pay for the coffee in advance.