I run an apparel manufacturing company that creates products for other businesses. For the longest time, we've always collected payment upon completion of a project.
I have 1 large client that had us on extremely long NET terms but recently agreed to do one of the following:
a. Pay upon completion – the usual way we do with other clients
b. Invoice them $5,000 per week (and receive the payment within a few days) before we even start the next batch of items.
Option b sounds attractive, but I feel like things can get unorganized that way. The money should be used as payment for the product, but it will never balance out exactly to $5,000 per week. So we may be over/under depending on the outcome of production. At this moment, I am the only person that handles the bookkeeping and management so I worry I can somehow screw it up if we have the money up front.
Any opinions on the better way to go? I've never operated that way so I'm not sure what the exact pros and cons would be.
Edit: Forgot to mention that this client's work is continuous and the different products vary. So it's not like we would give them a $5,000 invoice and have a list of items to make against that invoice. It is literally just producing whatever we have in front of us.