NY law dictates the terms upon which retailers must pay brewers for their beer. The law protects breweries from losses and keeps cash flow healthy. The best part, you don’t need to be the “bad guy” in negotiations with your accounts because the law gives you no choice as to the sale and payment terms. At a recent meeting between the State Liquor Authority and New York farm and microbreweries, conversation revealed that a significant number of breweries are not in compliance, and to their detriment since the laws are in place to protect them. Many breweries are offering 30 day payment terms and waiting significantly longer for actual payment. Getting in compliance will not only relieve you of the risk of disciplinary activity, it will help your bottom line.
Let’s look at the basics of the Liquor Authority’s COD system:
All breweries must register online for an account.
Payment for beer by other retailers must be via check or cash. Post-dated checks and credit card payments are illegal.
Checks MUST be from the bank account of the licensed retailer. Breweries cannot accept checks from other business entities, even if owned by the same individual, nor accept personal checks.
There is a legally established due date for all payments that are not COD. It is available on the Authority’s website and is always on a Friday. Each 2 week delivery period has a specified payment date. 5 days after the legally prescribed due date, that is the following Wednesday, any overdue accounts MUST be reported via your online account.
Breweries must check the COD list before delivering beer to its accounts. Any retailer or wholesaler on the list must pay cash on delivery. Breweries can, but do not have to, accept checks from those on the COD list. It is illegal to allow them to pay later.
Breweries are allowed to require payment upon delivery. They have no obligation to allow later payment and risk being able to collect payment from cash strapped restaurants and bars.
Invoices must be delivered in person with the beer delivery. Mailing or emailing later is not compliant. This can be done as an additional step as an account statement but cannot be the first delivery of an invoice.
If you would like assistance in implementing a legally compliant payment system, contact our team.