For growing breweries, flexibility is everything – both in the brewhouse, where the ability to develop and iterate recipes is key to meeting consumer demand, and in the back office, where financial agility is essential to maximizing capital.

Crosby Hops’ monthly payment plan helps breweries gain more flexibility by breaking up hop contracts into 12 predictable payments, eliminating cumbersome lump sum payments while improving flexibility and cash flow, benefitting your beer and your business.

Hop Contracts Can Pose Accounting Challenges

Hop contracts are an invaluable tool for nearly every brewery. However, hop contracting isn’t without its challenges. One such challenge is the strategic budgeting that’s required to cover the contract terms:

• On August 1, breweries are billed a 25% down payment for the upcoming contract year.
• As they pull from their contract, they pay for the hops ordered as well as the freight.
• By August 31 of the following year, the contract must be paid in full.
• Come August 31, breweries are responsible for any unpaid balance, which could result in having to pay a sizable final payment.
• In the same month that the final payment is due, they may also be making a down payment for the next contract year.

These terms often pose a couple of serious challenges for many breweries:

1. They require breweries to carefully plan and budget their finances to ensure contracts are covered. Not budgeting enough money could put them at risk of not being able to pay a key vendor. Budgeting too much money could withhold valuable capital that might otherwise be put to use in other important areas of the business.
   
   It’s akin to trying to set aside uncollected income tax you know you’ll have to pay on April 15 – you want to save enough to cover the payment but not a dollar more than what you actually owe.
   
   
2. The combination of a 25% down payment and a possible lump sum payment in the last month of the contract – both of which come due in the same month – means breweries may have to put forth a significant amount of capital at once. If they haven’t properly budgeted, it could cripple much-needed cash flow.

A Hop Subscription Model

In industries such as technology, vendors have helped customers mitigate the risk of and eliminate the need for large capital investments through a subscription model. Our monthly payment plan is essentially a hop subscription that allows you to spread your contract investment into 12 easy payments.

Here’s How It Works:

• There is no down payment – you just pay the monthly portion of your hop contract.
• Each month, you make the same payment.
• When you pull hops from your contract, the payments you’ve made are applied to your order. All you owe is freight.
• There is no lump sum payment at the end of the contract. Your last payment is the same as your first payment.

In contrast to the typical hop contract terms, this model makes things cut and dry. Combined with the accessibility and convenience of our Brewer Portal, it also makes it incredibly easy. But simplicity is just one of the benefits monthly payments offer.

7 Benefits of the Monthly Payment Plan

1. Increase predictability and your ability to budget month over month.
2. Improve cash flow, freeing up valuable capital for marketing, upgrades, expansion, R&D, and other business drivers.
3. Eliminate the nightmare of getting stuck with a large bill in the last contract month.
4. Achieve more cost certainty during uncertain times marked by rising costs.
5. Allow brewers to quickly and easily order the hops they need when they need them, right in the portal.
6. Give accounting the peace of mind of knowing that the hops being ordered are prepaid.
7. Help stabilize budgeting during annual ebbs and flows, especially for tourist-driven and season-heavy breweries.

Additionally, we can build the monthly payment plan into contract terms, consolidating everything into a single simple document.

Simple. Convenient. Easy.

Like much of brewing, managing hop contracts is both an art and a science. From forecasting and budgeting to monitoring trends, it can be a lot. The monthly payment plan makes the budgeting side of contracting much easier, providing a simple solution to breweries while also giving them the predictability and flexibility to focus on brewing great beer and growing their business.

If you’re interested in a monthly payment plan, speak with your account manager.