Payment Terms: Direct Purchasing vs. Two-Step Distribution

How do payment terms compare when purchasing directly from manufacturers versus through two-step distributors? We recently explored this topic with lumberyard respondents who purchase both direct and through two-step distribution. The results were interesting.

To start, we found three-quarters of lumberyards purchase at least some materials directly from manufacturers as shown in Figure 1, below.

Figure 1

Among lumberyards who purchase direct, more than 60% believe payment terms offered by manufacturers are superior to those they receive from two-step distribution. This was true across all payment terms as outlined in the six evaluated in Figure 2.

Figure 2

We will continue to monitor this trend going forward, though prior research indicates direct purchasing is on the rise. More attractive payment terms could impact the trend of greater direct purchasing.