Why payment terms vary so widely
Payment terms in Nigerian retail reflect the power dynamic between buyer and supplier, the formalisation level of the retail format, and the historical credit culture of the sector. Informal trade operates almost entirely on cash or very short credit terms because the relationship is transactional and there are no formal mechanisms for enforcing longer credit arrangements. Modern trade operates on longer credit terms because retailers have the purchasing power to impose them and suppliers accept them to access the channel.
Payment terms by channel type
| Channel Type | Typical Payment Terms | Collection Reliability | Working Capital Risk |
|---|---|---|---|
| Open market / wholesaler | Cash or 7–14 days | High | Low |
| Neighbourhood provision stores | Cash or 7 days | Very high | Very low |
| Independent supermarkets | 30–60 days | Medium | Medium |
| Regional supermarket chains | 45–75 days | Medium-high | Medium-high |
| Large chain accounts | 60–90 days | High (slow) | High |
| Via DALA | 30 days guaranteed | Very high | Low |
Source: DALA account management data and brand partner feedback, 2025
The reliability dimension
Payment terms on paper are not the same as payment terms in practice. A supermarket chain that nominally pays on 60-day terms may in practice pay on 80–100 days due to internal processing delays, disputes, or cash flow management on the buyer side. For brands that are counting on payment to arrive within the stated terms, this variability creates planning problems.
The large chain accounts show a pattern of high reliability but slow execution: they will pay, but they will pay late. Independent supermarkets show higher variability: some pay promptly, others stretch to 90 days or beyond. Managing payment collection from 40–60 supermarket accounts individually requires dedicated accounts receivable capacity that many Nigerian FMCG brands do not have.
The channel mix implication
From a cash flow perspective, a brand that sources revenue from a mix of informal trade, independent supermarkets, and large chains has a naturally diversified payment profile. Informal trade cash sales fund operating costs immediately, while modern trade builds the brand equity and volume that long-term growth requires. A brand that is exclusively in large-chain modern trade has the best brand positioning but the worst cash flow profile.
DALA's 30-day payment guarantee effectively converts modern trade's cash flow characteristics to something closer to wholesale or informal trade, without sacrificing the brand equity and consumer access that modern trade provides.
