Most brands negotiating their first listing agreement in Spain focus on the number that matters most to them: The price the retailer will pay per unit. Payment terms often get far less attention, but they can have a significant impact on cash flow, especially when entering a new market. Understanding how and when you will get paid should, therefore, be part of the commercial discussion from the start. Here are four key points FMCG brands should consider when negotiating payment terms with Spanish retailers.
Payment terms are part of the wider commercial agreement
A listing agreement much more than the price a retailer pays per unit. Price, promotional commitments, volume discounts, logistics costs, and payment terms, etc. A good price does not necessarily mean a good deal if promotional investment, logistics costs or payment conditions put too much pressure on your margin or cash flow.
Before signing, look at the complete picture: what will this account actually deliver once all commercial conditions are taken into consideration?
What longer payment terms do to your cash flow
When entering the Spanish retail market, it is important to consider the gap between when you pay your suppliers and when you receive payment from the retailer.
For example, if production and logistics costs are paid within 30 days but the retailer pays at 60 days, your business needs to finance that difference. As volumes grow, with several SKUs and regular replenishment, the impact on working capital can become significant.
This is why payment terms should be included in your financial planning from the beginning. A retail listing may be commercially attractive, but you also need to make sure your business can support the cash flow required to grow the account.
Payment terms in Spain vary and payments can also be delayed
In Spain, payment terms in the food and beverage sector are regulated and vary depending on the type of product you sell. Fresh and perishable products are generally subject to a maximum payment period of 30 days, while other food products can have payment terms of up to 60 days.
However, the agreed payment term does not always mean that the money will reach your account exactly on that date. Administrative issues, invoice discrepancies, missing documentation or internal payment processes can sometimes delay payment.
For international FMCG brands entering Spain, this is important to factor into cash flow planning. Understanding the applicable payment term is essential, but so is having the right invoicing and administrative processes in place and following up on outstanding payments.
Not every retailer negotiates the same way
Payment terms and commercial conditions can also vary depending on the type of retailer you are negotiating with. Large supermarket groups generally work with more standardized commercial frameworks and centralized buying processes, while specialized or regional retailers may have different structures and ways of working with suppliers.
In addition, AICA monitors compliance with payment terms across the Spanish food supply chain, providing an additional level of protection for suppliers. This gives international brands a clear regulatory framework when negotiating with retailers in Spain.
For an international FMCG brand, understanding these differences before approaching a retailer is important. The right negotiation strategy will depend not only on your product, but also on the retailer, the channel and the potential size of the account.
One more thing on the horizon
Spain is rolling out mandatory B2B e-invoicing over the next two years, which will require payment status to be reported within days rather than left to informal tracking. It won’t change the legal terms themselves, but it will make payment behavior across the market far more visible than it’s been until now, worth knowing, not worth building your whole strategy around.
Payment terms may look like just another clause in a retail agreement, but they can have a significant impact on the profitability and cash flow of your Spanish business.
Before signing with a retailer, look at the complete commercial picture: the applicable payment period, margins, promotional investment, logistics costs and the working capital required to support the account.
At Hola Spanish Market, we help international FMCG brands understand the Spanish retail landscape, negotiate with retailers and build commercially sustainable market entry strategies.
Planning your entry into Spanish retail? Say Hola!
Sources:
https://www.boe.es/buscar/act.php?id=BOE-A-2004-21830
https://www.boe.es/eli/es/l/2013/08/02/12/con
https://www.boe.es/eli/es/l/2021/12/14/16/con
https://www.aica.gob.es/ley-de-la-cadena/
https://www.mapa.gob.es/es/prensa/ultimas-noticias/detalle_noticias/la-aica-refuerza-sus-actividades-de-control-del-cumplimiento-de-la-ley-de-la-cadena-en-coordinaci-n-con-las-comunidades-aut-nomas-/8e40cbab-0f12-4dfd-b429-bef3b5963ade
https://www.eldiario.es/economia/corte-ingles-entra-nomina-grandes-empresas-sancionadas-saltarse-ley-cadena-alimentaria_1_13327351.html