Mercury vs Relay: Banking for a B2B Wholesale Distributor

A distributor's cash position depends heavily on the gap between paying suppliers and collecting from customers, and that gap widens whenever customer terms are longer than supplier terms, which is common in this industry. Calculate your actual working capital need: inventory on hand plus receivables outstanding, minus payables outstanding, and treat that number as the baseline your banking and financing setup needs to support, not an afterthought discovered when cash runs tight.

Mixing incoming customer payments with the cash earmarked for the next supplier payment run makes it hard to see whether collections are actually keeping pace with purchasing. A dedicated sub-account for supplier payments, funded from collections on a set schedule, keeps that pacing visible. Relay's free sub-accounts make this straightforward to set up; Mercury's structure supports it too, with an API that a distributor running ERP or inventory management software can use to pull real-time balances into that system directly.

Distributors commonly use a line of credit or inventory financing to bridge the gap between buying stock and collecting on it, and that financing is priced off the bank prime rate, currently 6.75%¹. Build that real financing cost into how you price goods, especially for customers on the longest payment terms, rather than treating the cost of carrying their receivable as a hidden loss absorbed into overall margin without anyone actually pricing it in.

A distributor that's built a healthy cushion above its calculated working capital need is holding cash that should be earning something rather than sitting flat. The 10-year Treasury yield is at 4.44%², a useful reference for what conservative, liquid reserve cash should earn. Mercury's automated Treasury sweep captures yield near current short-duration rates on cash above your operating buffer, a reasonable fit once your reserve genuinely exceeds what working capital requires day to day.

At net-60 or net-90 terms, a handful of customers running consistently late can meaningfully strain a distributor's own cash position, since your supplier payment obligations don't stretch just because a customer's does. Track days-to-pay per customer, not just in aggregate, so you can identify the specific accounts driving the strain and address it directly, tightening terms, requiring a deposit, or in persistent cases reconsidering the relationship, rather than financing around a pattern indefinitely without ever naming it.

A distributor running dedicated ERP or inventory management software gets real value from Mercury's API, pulling bank balances and transactions directly into a system that's already tracking purchase orders, receivables and payables. A smaller distributor running the books through QuickBooks or Xero without a dedicated ERP is often well served by Relay's accounting integrations and extra checking accounts on the free plan (up to 20 per business per its pricing page), at least until transaction volume and complexity justify more specialized software and the integration work that goes with it.ith it.

Calculate your current working capital need using real numbers from your last several months, not a rough guess. Check your days-to-pay by customer to identify which accounts, if any, are quietly straining your cash position. And confirm whether your current financing, if any, is actually priced competitively against the real cost of carrying your receivables at current rates, since a facility set up a few years ago may no longer reflect today's rate environment.

Before you apply, gather these numbers and checks:

• Calculate your working capital need from real numbers over the last several months, not a rough guess.
• Check days-to-pay by customer to find which accounts are quietly straining your cash position.
• Review the cost of any current inventory financing against the margin on the goods it funds.
• Set up a dedicated sub-account for supplier payments, funded from collections on a set schedule, so you can see whether collections keep pace with purchasing.

A distributor that doubles revenue without revisiting its working capital calculation is likely doubling its financing need as well, since inventory and receivables scale with volume even when payment terms and supplier relationships stay the same. Revisit the full calculation, working capital need, financing cost, days-to-pay by customer, at least twice a year, and treat any quarter of unusually fast growth as a trigger to redo it sooner, since that's exactly when a distributor is most likely to discover its credit facility hasn't kept pace with what the business actually needs to fund.