A wholesale deposit is a part payment a store sends before you make or ship their order, usually a third to a half of the invoice, with the balance due when the goods leave or on terms after that. It exists for one reason: you buy materials before the product exists, and the deposit means that money is not all yours.
For a brand that has only ever taken card payments on a Shopify checkout, asking a stranger for money before anything ships feels rude. It is not. Every category that makes things to order runs on deposits, and a buyer who has bought from small brands before will not blink at a line in your terms that says so.
What a deposit actually covers
Take a stoneware mug that retails at twenty-eight dollars and wholesales at thirteen, sold in cases of four. A case is fifty-two dollars. Your landed cost per mug, counting clay, glaze, firing, the gift box and the barcode label, is five dollars forty.
A shop places a reasonable second-season order: twenty-four cases, ninety-six mugs, twelve hundred and forty-eight dollars. Before you ship a single one you have to spend ninety-six times five forty, which is five hundred and eighteen dollars and change, on clay and boxes, plus however many days of your own labour.
A deposit of half is six hundred and twenty-four dollars. That covers the materials with room to spare. That is the whole logic of the number, and it is worth saying out loud to yourself before you set a policy: the deposit should be large enough to pay for the goods, not large enough to make the order profitable. Profit arrives with the balance.
When to ask for one
There are four situations where a deposit is the right instrument, and a lot of situations where it is overkill.
Ask for a deposit when the order is made to order and you cannot resell the units to anyone else — custom colourways, a store-exclusive scent, private label, anything with the retailer's name on it. If the account walks away mid-production you are holding stock nobody wants.
Ask when the order is large relative to your normal business. If a typical case order is four hundred dollars and someone sends a purchase order for four thousand, that single order can drain your cash for a month. Half up front turns a risk into a funded production run.
Ask when a new account wants terms straight away. The usual answer to a first-time buyer asking for thirty days is no, and a deposit is the compromise that keeps the conversation alive: half now, half on the invoice date, terms considered on the second order. The full reasoning behind that sequence is in opening order.
Ask when you are producing months ahead of a season. Holiday orders placed in August and shipping in October mean you carry the cost through the slowest quarter of your own year.
Where a deposit is usually unnecessary: a small first order from a local shop paid by card at the time of ordering. That is already prepayment. Do not wrap a two-hundred-dollar order in paperwork that makes you look like you have never done this.
How much to ask for
Three numbers do almost all the work.
Half. The default for custom or made-to-order production. It covers materials, it signals commitment, and it is the number buyers expect when the goods are being made for them specifically.
A third. The softer version, good for large stock orders of products you already make. It funds the materials on most catalogues and feels less like a hurdle.
All of it. Not a deposit at all, but prepayment, and the correct policy for a first order from any account you have not worked with. Nearly every brand that gets burned on wholesale got burned by extending credit to an account on its first order.
The one number to avoid is a percentage you picked because it sounded professional and then cannot defend. If a buyer asks why you want half, the answer should be a sentence about materials and lead time, not a shrug.
Deposit, prepayment and terms are three different things
These get muddled constantly in emails, and the muddle is expensive.
Prepayment means the full invoice clears before the goods ship. Nothing is owed afterwards.
A deposit means part of the invoice clears before production, and the rest is owed on a stated date — usually shipment, sometimes thirty days after it.
Terms mean nothing clears before the goods ship, and the whole invoice is due on a date in the future. That is credit, and it is a different decision with different risks, laid out in net 30 terms.
It is entirely normal to combine them: half deposit, balance net thirty. The store gets a month of breathing room on the second half, you get your materials funded, and the exposure if the account fails is the balance rather than the whole order. For a small brand that combination is usually the most generous thing you can afford to offer.
How to say it without losing the order
The wording matters less than the placement. A deposit that appears for the first time in an email after the buyer has chosen their assortment reads as a surprise charge. The same deposit printed in your terms, which the buyer saw on the second page of your line sheet before they picked anything, reads as how this brand works.
So put it in writing before the conversation, in one plain sentence. Something like: orders over a thousand dollars and all custom production require a deposit of half, with the balance due on shipment. That is it. No apology, no explanation of your cash flow, no three paragraphs about how hard it is to be a small maker.
When a buyer pushes back, the useful move is to offer a smaller order rather than a smaller deposit. "The deposit applies over a thousand dollars, so we could start you at eight hundred and reorder in six weeks" keeps the policy intact and keeps the account. Splitting the order is almost always better than splitting your terms, because terms you bend once become terms you bend forever. The rest of the policies that belong in that same document are covered in wholesale terms.
Getting the money and recording it properly
Practically, a deposit is an invoice. Send a real document with a number on it, not a payment link in the body of an email. It should say deposit, state the total order value, state the balance, and state the date the balance falls due. Then the shipping invoice references the deposit invoice and shows the balance only.
Two mistakes to avoid. Do not record the deposit as revenue on the day it lands — it is money against goods you have not delivered, and treating it as income makes a month look good and the next one look terrible. And do not let the balance date float. "Due on shipment" is a date the moment you print a label, so put that date on the document rather than leaving it as a phrase.
If you run the wholesale side through your store rather than a separate system, a draft order with a deposit taken as a partial payment is usually cleaner than trying to build two invoices by hand. The mechanics of laying out the document itself, including how the deposit line should appear, are in wholesale invoice.
What a deposit does not protect you from
It is worth being clear-eyed. A deposit protects your materials cost. It does not protect your time, it does not guarantee the balance, and it does not make a bad account good.
If a store takes delivery and then goes quiet on the balance, you have half the money and no leverage, because the goods are already on their shelf. That is why the size of the second half matters more than the size of the first, and why a brand with one account owing four thousand dollars is in a worse position than a brand with eight accounts owing five hundred each.
It also does not solve the underlying question of whether the account is worth having. A shop that negotiates hard on a deposit before they have sold a single unit tends to negotiate hard on everything afterwards. The deposit conversation is free information about who you are about to work with, and it is worth listening to rather than just getting through.
If you are not yet sure which kinds of stores would plausibly stock your product at all, paste your store or product link into WholesalePilot and look at the preview of retailers and distributors that carry comparable things. Knowing the type of buyer you are aiming at makes the deposit policy easier to set, because a chain buying two hundred cases and a single boutique buying four need different answers.
Questions brands ask about wholesale deposits
Is a deposit refundable if the store cancels? Say so in your terms, and the honest answer for made-to-order goods is no once production has started. Write that sentence before you need it.
Can a deposit and a minimum order both apply? Yes, and they usually should. The minimum decides whether an order is worth producing; the deposit decides whether you can afford to produce it. The thinking behind the first number is in minimum order quantity.
Do marketplaces handle this for you? On most wholesale platforms the buyer is charged at the order and you are paid on a schedule, so there is no deposit to collect. The deposit question only really applies to accounts you invoice directly.
Does asking for a deposit make a brand look small? It makes a brand look like it makes things. The buyers who read it as inexperience are usually the ones who would have paid late anyway.