Buyer receivables
Receivables risk in grain trading: terms, documents, insurance, working delinquencies
Risks and tools
Payment terms
Prepayment, CAD (cash against documents), LC, open account 7–30 days. Each deferred day costs: funding rate × days / 365.
Documents = control
Receipts/BOLs/release orders — whoever holds documents controls the goods. Release without originals only to proven buyers.
Counterparty limits
Buyer limit = % of working capital. Check registries, debts, cases, payment history. New buyer — smaller limit and prepayment.
Receivables insurance
Trade credit insurance or factoring covers buyer bankruptcy/non-payment. Costly, but pays off on large terms.
Aging and reserves
Keep an aging report: current, 1–30, 31–60, 60+. Reserve rule: 60+ days — 50%+, doubtful — 100%.
Delinquency work
Day 1 — reminder, day 7 — formal claim, day 14 — stop shipments, day 30 — lawyer/insurer. Response speed determines recovery.
In grain, receivables are the top cause of trader cash gaps: selling on terms while buying on prepayment means you finance the chain. The fix — counterparty limits, documents and insurance, not just trust.