For Pros

Net 30 vs Net 60: how trade credit works

Trade credit terms — Net 30, Net 60, Net 15 — are basically a short-term, no-interest loan from your supplier. Used well, they cover the gap between when you buy materials and when you get paid for the job. Used poorly, they pile up and wreck your business.

Reading time 5 min

Skill level Business owner / project manager

Job cost Free (terms have no fee if paid on time)

The Honest Read

What this job actually involves

“Net 30” means you have 30 days from the invoice date to pay in full. Net 60 means 60 days. No interest is charged during that window — it's the supplier extending you credit at zero cost as part of the business relationship.

Why it matters: a contractor pays for materials when they're delivered (day 0), but doesn't usually invoice the customer until milestones are hit (day 15–45), and doesn't get paid by the customer until weeks after that (day 30–60). Without trade credit, contractors have to float that gap themselves. With Net 30 or 60, the supplier floats it.

Trade credit is a privilege, not a right. Suppliers extend it based on your credit history, the references you provide, and the relationship you build. Default on terms once and the credit goes away — often permanently. Pay on time for years and your limits grow.

What you need

Tools & materials

Shop the supply side here. The big-ticket stuff and the brand-restricted items, we'll point you local further down.

Tools

Business credit application (we have one)
Three trade references (other suppliers who will vouch for your payment history)
Bank reference (usually account number and contact info for your business bank)
Business tax ID (EIN) and entity documentation

Materials

Your business's payment history (the more on-time you've been, the higher the limits offered)
DUNS number (helpful but not always required)
Most recent two years of business financial statements (for higher credit limits)

The Steps

How to set it up and use it well

Apply

Most suppliers (us included) have a credit application — usually 1–2 pages. You'll provide business info, tax ID, three trade references, a bank reference, and authorize a credit check. Most decisions come back in 2–5 business days. Initial credit limits are often modest ($1,000–$10,000) and grow with payment history.

Read the terms carefully

Net 30 is the most common. Net 30 from invoice date is the standard — meaning the clock starts when the invoice is generated, not when the materials are delivered. Some suppliers offer Net 30 from end of month (EOM) — slightly longer in practice. A few offer Net 60 to bigger or longer-relationship accounts. Confirm in writing.

Use it for cash flow, not for funding overextension

Trade credit works when you have payment coming in by the time the invoice is due. It fails when you use it to fund work you can't afford. If you're consistently paying invoices on day 27 and not before, you're stretching. If you're paying on day 31+ and racking up late fees or service interruptions, you're past stretching — you're underwater.

Pay early when you can

Many suppliers offer 1–2% discounts for paying in 10 days instead of 30 (sometimes written “2/10 Net 30”). On a $10,000 invoice, that's $200 — annualized, that's a 36% return on the cash you spent 20 days earlier. The math heavily favors paying early if you have the cash. If you don't, use the full 30 days.

Build the relationship

Pay every invoice on time. Communicate proactively if a payment is going to be late (a phone call before due date keeps the relationship; a missed payment with no warning damages it). Ask for limit increases as your business grows. Trade credit relationships compound — a 10-year on-time history opens doors that no application alone can.

Know when to fire a supplier

Trade credit goes both ways. If a supplier is consistently shipping late, sending wrong items, or making payment processing painful, the value of the credit terms isn't worth the operational friction. Move the relationship to a supplier who's competent. The terms matter, but they're not the only thing.

Try local first · We'll wait

Why your local hardware store probably already offers Net 30

Most independent hardware stores will set up a contractor account with Net 30 terms for active contractors in their area. It's the way the industry has worked for decades.

Counter accounts at the local store — fastest way to get terms in place for small-dollar daily purchases
Same-day pickup beats waiting for a freight shipment when you're on a deadline
Authorized dealer for restricted brands (Stihl, Milwaukee, DeWalt) on commercial terms
Local reps and store managers who understand contractor cash flow — they've lived it
Account history that follows you across the partner network if you move suppliers

Find a local hardware store →

When to call a pro

Talk to a CPA or business advisor before committing to large credit lines if: your business is under two years old (limits will be modest anyway, but make sure your accounting can handle the AP load); you're entering high-cost project types (commercial builds, government contracts with slow pay schedules — you may need more credit than you think); or you're considering factoring or invoice financing on top of trade credit (these stack in dangerous ways if not managed carefully).

Keep going

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