Wholesale is the only part of consumer retail where the seller routinely ships goods and then waits a month or more to get paid. A buyer at a regional chain will ask for net 30 on the first order and treat it as a formality, not a negotiation. For a brand that has already paid a factory, a freight forwarder and a customs broker, saying yes means financing someone else’s inventory out of your own bank balance.
That is the real trade in B2B buy now pay later for wholesale: you can keep carrying the risk and the cash gap yourself, or you can hand one or both to a third party and pay for the privilege. This piece walks through what terms actually cost, how B2B pay later providers price the same risk, what their non-recourse cover does and does not include, and how to decide which accounts get terms at all.
In short
- Terms are table stakes in wholesale. Most buyers of any size expect open account billing, and a proforma-only policy will cost you accounts before it ever protects you.
- Net 30 is rarely 30 days. Plan against actual days sales outstanding, which in practice tends to run several days past the stated term, not against the number on the invoice.
- B2B pay later moves risk for a discount rate. Providers typically quote a percentage of invoice value that rises with term length and buyer risk, and they pay you shortly after shipment or invoice.
- Non-recourse is not the same as guaranteed. Cover generally applies only within an approved limit and almost always excludes disputed invoices, which is where most wholesale losses actually start.
- Terms are a pricing decision, not a courtesy. If you are going to fund 30 to 60 days of a buyer’s inventory, that cost belongs in the wholesale price or in a documented early payment discount.
Why wholesale buyers expect terms
Trade credit is the oldest form of business finance and still one of the largest. A retailer that buys on open account is, in effect, borrowing from its suppliers at no stated interest rate, which is cheaper and faster than any bank facility available to a small store. The practice is old enough and widespread enough to have its own entry in the general literature on trade credit, and in most consumer goods categories it is simply how the channel runs.
The buyer’s logic is straightforward. A store that pays for goods on delivery has cash tied up in every unit sitting on its shelves, and shelf life for apparel or seasonal home goods can run well past 90 days. Terms shift that burden upstream to the brand. From the buyer’s side, a supplier who insists on payment before shipment is asking the store to finance the brand’s growth.
This is the part that catches founders moving from direct to consumer into wholesale for the first time. In D2C the money arrives before the box does, so working capital questions mostly concern inventory, not receivables. Wholesale inverts that, and the rest of the operation changes with it, which is why terms policy belongs in the same conversation as purchase orders, routing guides and chargebacks covered in our guide to wholesale operations for consumer brands.
What net 30, net 60 and 2/10 net 30 actually mean
Net 30 means the full invoice is due 30 days from the invoice date, unless the contract says the clock starts at delivery or at receipt of a clean invoice. Those three start points can differ by a week or more on an import shipment, so the wording matters. Net 60 and net 90 work the same way on a longer clock and are common in grocery, hardlines and anything sold through distributors.
The notation 2/10 net 30 is an early payment discount: the buyer may deduct 2 percent if it pays within 10 days, otherwise the full amount is due at 30 days. It looks generous until you annualize it. Giving up 2 percent to collect 20 days early works out to roughly 37 percent on an annual basis, calculated as the discount over the net amount, multiplied by 365 divided by the days saved.
That number is worth internalizing before you offer a discount casually. If your own borrowing costs sit anywhere in normal commercial range, a 2 percent discount for 20 days is an expensive way to buy cash. A 1 percent discount for the same 20 days costs about 18 percent annualized, which is a different conversation.
Who actually sets the terms
In theory terms are negotiated. In practice the larger party sets them and the smaller party accepts, which means a growing brand typically dictates terms to its smallest independent stockists and accepts whatever a national chain’s vendor agreement specifies. Large retailers often standardize terms across the entire supplier base and treat exceptions as an escalation.
It is also worth separating this from the consumer side of pay later, which solves a different problem. Consumer installment products sit at your checkout and finance the shopper, as covered in our breakdown of Klarna, Afterpay and Affirm for US merchants. B2B terms finance your buyer, and the underwriting, the ticket sizes and the loss patterns look nothing alike.
The cash gap net 30 creates for a small brand
The cost of terms is not the bad debt. For most brands bad debt is a small, lumpy line. The real cost is the working capital you have to hold permanently so that the business can keep shipping while it waits to be paid.
Work it through on a single order. A brand places a factory order and pays a 30 percent deposit, then the balance before the container sails. Goods land, clear customs and sit in the warehouse for a few weeks before the wholesale order ships. Only then does the invoice clock start, and only then does net 30 begin.
Stack those stages and the money can be out of the account for 120 days or more against a 30 day term. That is why terms feel so much more expensive than the number suggests: the receivable is the last link in a long chain that was already consuming cash.
How much working capital each term level consumes
The useful way to size this is per dollar of monthly shipping, because it scales with the business. Multiply your average daily shipments by your actual days sales outstanding and you get the steady state receivable balance you need to fund. The table below uses a brand shipping 10,000 dollars of wholesale per month, with illustrative payment behavior rather than measured industry averages.
| Terms offered | Stated days | Illustrative days to actual payment | Receivables funded at $10,000 shipped per month |
|---|---|---|---|
| Proforma (payment before shipment) | 0 | 0 | $0 |
| 2/10 net 30, discount taken | 10 | 19 | $6,333 |
| Net 15 | 15 | 22 | $7,333 |
| Net 30 | 30 | 38 | $12,667 |
| Net 60 | 60 | 71 | $23,667 |
| Net 90 | 90 | 104 | $34,667 |
The jump from net 30 to net 60 costs this brand roughly 11,000 dollars of permanently committed cash. Doubling the business doubles that number. Nothing about the quality of the buyer changes the arithmetic, which is the point: terms are a balance sheet decision before they are a credit decision.
Growth makes the gap worse, not better
A wholesale brand growing 50 percent year on year has to fund a receivable book growing at the same rate, on top of the inventory it needs to support the higher volume. This is the classic way profitable businesses run out of money. The profit is real, it is just sitting in other people’s stores and in your own warehouse.
The honest comparison is against your other uses of cash. If the same dollar could buy inventory that turns three times a year at a healthy margin, funding a 60 day receivable is an expensive choice, and the channel economics should be measured with that in mind rather than on gross margin alone. The contrast with consumer pay later is instructive here, because at the D2C checkout the provider funds the shopper and you are paid up front, a mechanic we unpack in our look at how BNPL affects retail conversion rate.
Credit checks and setting a limit per account
Granting terms without checking anything is common among small brands and it is the single easiest thing to fix. A credit decision needs two outputs: whether this account gets terms at all, and what the exposure limit is. Both should be written down before the first order ships.
Commercial credit bureaus such as Dun and Bradstreet, Experian Business, Equifax Commercial and Creditsafe sell business credit reports on US entities. Coverage of very small independent retailers is often thin, and a clean file frequently means nothing more than a thin file. Treat a bureau score as one input rather than a verdict, and check the figures and the entity details directly with the provider, since file data changes continuously.
Trade references are more informative than scores at this size. Two or three current suppliers who will confirm how the account actually pays will tell you more than any score, especially if you ask for the average days beyond terms rather than a yes or no on whether they pay.
What a credit application should collect
A one page application does most of the work. Collect the exact legal entity name and state of registration, the trading name if different, the federal employer identification number, the billing address and accounts payable contact, two or three trade references with contact details, the bank reference, and the requested credit limit.
Verify that the legal entity on the application is the entity actually trading from the store. A name that looks right on a state register can belong to a dormant or dissolved company, and an invoice addressed to the wrong entity is hard to enforce. Check registration status and the registered address, not just the name.
The application should also state the terms themselves: the payment period, what happens on late payment, who pays collection costs, and the governing state law. Those clauses are routine, but they only exist if you put them there, and their enforceability varies by state. Have the template reviewed by a qualified attorney in your jurisdiction before you use it.
Start small and raise the limit on evidence
The most reliable approach with new independent accounts is a graduated limit. Open at a level you can afford to write off entirely, perhaps one order’s worth, and raise it after a documented history of payment within terms. Three clean cycles is a reasonable bar.
Keep the limit as a hard ceiling in the order process, not as a note in someone’s inbox. If a buyer at the limit places another order, the order sits on credit hold until the open invoice clears. That rule is much easier to apply consistently when the system enforces it rather than a person deciding case by case.
B2B pay later providers and how pricing works
B2B pay later platforms, sometimes marketed as net terms as a service, sit between you and your buyer. The provider underwrites the buyer, approves a limit, and pays you shortly after you ship or invoice. The buyer then pays the provider on the agreed term, typically net 30, net 60 or net 90.
From the buyer’s perspective nothing much changes: they still get terms, and in a well integrated flow they select terms at checkout on your B2B portal exactly as they would select a card. From your perspective the receivable leaves your balance sheet and becomes cash, minus a fee. The model borrowed its mechanics and much of its vocabulary from the consumer side, a lineage we traced in the BNPL playbook for retail in 2026.
How the fee is structured
Pricing is usually a discount rate expressed as a percentage of invoice value, rising with the length of the term and the assessed risk of the buyer. Providers commonly quote in a low single digit percentage band for 30 to 60 day terms on approved buyers, with longer terms and weaker buyers priced higher. Rates are negotiated per merchant and change over time, so treat any published figure as indicative and get a written quote for your own volume and mix.
Some providers charge the merchant, some let the merchant pass the fee to the buyer as a terms fee, and some offer both depending on the market. Passing it on is cleaner in categories where buyers already expect to pay for extended terms, and poison in categories where they do not. The right answer is category specific and worth testing on a subset of accounts.
Watch for the secondary charges as well: setup fees, minimum monthly volumes, per transaction charges on top of the discount rate, and chargeback style deductions when an invoice falls outside cover. The headline rate is rarely the whole cost, the same way the headline rate on consumer installments is not, as we found when comparing BNPL merchant fees against card and wallet costs.
The alternatives, side by side
B2B pay later is one of several ways to deal with the same problem, and they are not mutually exclusive. The table below sets out the main routes and what each one actually does for you.
| Route | Who carries non-payment risk | Typical cost shape | When you get cash | Main limitation |
|---|---|---|---|---|
| Self-funded net 30 | You | Your own cost of capital plus bad debt | On the buyer’s actual payment date | Caps how much you can ship at any one time |
| B2B pay later platform | Provider, within the approved limit, if the facility is non-recourse | Discount rate as a percentage of invoice value | Days after shipment or invoice | Cover excludes disputed invoices and amounts over the limit |
| Invoice factoring | Depends on whether the facility is recourse or non-recourse | Advance rate plus a monthly discount fee on funds drawn | Days after invoice | Often involves notifying your buyer to pay the factor |
| Trade credit insurance | Insurer, up to the per-buyer policy limit | Annual premium plus per-buyer limit fees | Not accelerated: claims pay after a waiting period | Covers losses but does nothing for the cash gap |
| Card payment by the buyer | Card issuer | Merchant discount fee to you, interest to the buyer | Settlement, usually within days | Buyer must agree, and small store card limits are often low |
Non-recourse cover and what it excludes
Recourse means the provider can come back to you if the buyer does not pay. Non-recourse means it cannot, within the limits of the agreement. That final clause carries most of the weight, and it is the part worth reading twice before signing.
Non-recourse cover is generally conditional. It applies to invoices the provider approved in advance, up to the limit it set for that buyer, for goods actually delivered, where the buyer has not raised a dispute. Fall outside any of those conditions and the receivable comes back to you, usually by deduction from your next settlement.
The dispute carve-out is the one that bites
Almost every non-recourse facility excludes disputed invoices, and the definition of a dispute is broad. A short shipment, a damaged carton, a late delivery that missed a promotional window, a pricing disagreement, a returns credit the buyer says was never issued: all of these can qualify, and none of them require the buyer to be acting in bad faith.
This matters because disputes and non-payment are correlated in wholesale. An account under cash pressure is far more likely to find a reason the invoice is wrong. The cover you bought protects you best against the clean insolvency of an otherwise satisfied customer, which is the least common failure mode.
The practical defense is operational rather than contractual. Clean proof of delivery, signed receipts, documented returns authorizations and fast credit note issuance remove the raw material for most disputes. Brands with disciplined paperwork get far more value out of the same policy.
The other exclusions to look for
Beyond disputes, read the agreement for geographic scope, since many facilities cover domestic buyers only or price export cover separately. Check how the limit behaves when a buyer has multiple open invoices, and whether approvals expire if you ship late. Check what happens to orders placed before an approval is withdrawn.
Also check the withdrawal mechanics. Providers reassess buyers continuously and can reduce or pull a limit, sometimes with very short notice. A limit that disappears mid-season on your largest account is a commercial problem even when it is a correct credit decision, and you want to know the notice period before you build a season’s plan on it.
Chasing late payment without losing the account
Collections in wholesale are a relationship problem disguised as an accounting problem. The buyer who is 20 days late is often the buyer you want to keep, and the brands that handle this well treat chasing as a scheduled, unemotional process rather than an escalating series of personal appeals.
The single highest leverage change is to make the first contact early and make it administrative. A short note a few days before the due date, confirming the invoice is on file and asking whether anything is missing, catches the large share of late payments that are caused by a missing purchase order number, a wrong remittance address or an invoice stuck in approval.
A dunning schedule that works
| Timing | Action | Channel | Sender |
|---|---|---|---|
| 5 days before due | Courtesy reminder, confirm invoice received and approved | Automated from accounts | |
| Due date plus 3 | Polite overdue notice with invoice copy attached | Automated from accounts | |
| Due date plus 10 | Direct contact with the accounts payable contact, ask for a payment date | Phone, then email confirming what was agreed | Named person at your end |
| Due date plus 21 | Credit hold applied, buyer notified, open orders paused | Email plus call | Account manager |
| Due date plus 45 | Formal demand referencing the credit agreement, payment plan offered | Written letter and email | Owner or finance lead |
| Due date plus 60 to 90 | Referral to a collections agency or counsel, per your written policy | Per agency process | Owner or finance lead |
Credit hold is the lever that actually works, and it works because it is reversible. Pausing open orders until the account clears is a commercial consequence the buyer can fix the same day, unlike a legal demand that permanently changes the relationship. Apply it by policy so that it never reads as a personal decision.
Late fees and what the law allows
Late payment interest and collection cost recovery are governed by the contract and by state law, and the rules differ meaningfully across states. A late fee clause that is unreasonably high relative to actual loss can be challenged, and some states cap the rate that may be charged. Do not rely on a clause you copied from a template without checking it against the law of the state governing your agreement.
It is also worth knowing that the federal Fair Debt Collection Practices Act, administered in part by the Federal Trade Commission and documented in the FTC legal library, applies to debts incurred for personal, family or household purposes. Commercial debt between businesses generally falls outside its scope, though other federal and state rules on unfair or deceptive practices still apply. Confirm the current position with counsel rather than assuming either way.
Deciding which accounts get terms at all
Terms are not an all or nothing policy. The most robust approach is a small number of tiers with written criteria, so the answer to a buyer’s request is a policy rather than a negotiation. Four tiers cover almost every case.
- Proforma. Payment in full before shipment. The default for brand new accounts, any account that failed a credit check, and most export orders until a relationship exists.
- Deposit plus balance. A deposit on order with the balance due before shipment or on short terms. Useful for larger first orders where proforma in full is a genuine obstacle for the buyer.
- Net 30 within a capped limit. The standard tier for established independents with clean references, enforced by a hard credit limit in the order system.
- Negotiated terms. Net 60 or longer for chains and distributors whose vendor agreements require it, priced into the wholesale cost and ideally financed through a pay later facility rather than your own balance sheet.
When to decline, and how
Declining terms is a normal commercial outcome and is easiest when it is framed as policy rather than judgment. Say that new accounts open on proforma, state the specific condition for moving to terms, and offer a route: a smaller opening order, a deposit, or payment by card. Buyers rarely argue with a stated policy that comes with a path forward.
The one decision to avoid is granting terms you cannot afford to lose because you want the logo. A flagship stockist that fails owing you 60 days of shipments has cost you a season, and the shelf space was never worth that much.
Building terms into your price list and your plan
If terms are a financing product, price them like one. The cleanest structure is a wholesale price that assumes net 30 and an explicit early payment discount for buyers who want to pay sooner, with longer terms either priced higher or routed through a provider whose fee you can see.
Run the numbers per channel rather than across the business. A chain account on net 60 at a lower unit price can look similar to an independent on net 30 at full price on a gross margin line and look very different once the funded receivable is charged against it. That full channel view, including the cost of the cash you have committed, is the one that should drive where you push volume, and it belongs alongside the purchase order, routing and chargeback mechanics in our guide to wholesale operations for consumer brands.
Finally, review the policy on a schedule. Buyer risk moves, provider limits move, and your own cost of capital moves. A credit policy written at launch and never revisited is usually either strangling growth or quietly accumulating exposure, and a twice yearly review catches both before they become expensive.
A note on sources and advice
This article is general information about how wholesale payment terms and B2B pay later facilities work. It is not legal, tax, accounting or credit advice, and it does not take account of your contracts, your state or your circumstances. For decisions about credit agreements, late payment clauses, collections practice or the tax treatment of discounts and bad debt, consult a licensed attorney, a qualified accountant or a regulated credit professional in your jurisdiction.
Every figure here that is not explicitly labeled as an illustrative example should be verified at source before you act on it. Credit bureau data, provider discount rates, policy exclusions and state law on late payment all change, and they change without announcement. Where a rule or rate matters to a decision, confirm it with the regulator, the provider or the official text rather than relying on a summary, including this one.
FAQ on B2B payment terms
Is net 30 standard in wholesale, or can I set my own terms?
Net 30 is the most common default in US consumer goods wholesale, but it is not a legal requirement and nothing stops you from opening new accounts on proforma. The constraint is commercial rather than legal: buyers with alternatives will often choose the supplier who offers terms. Most brands resolve this with a tiered policy, offering terms only once an account has a payment history.
What is the difference between B2B pay later and invoice factoring?
Both convert a receivable into cash earlier, but the point of sale differs. A B2B pay later platform is usually embedded in your ordering flow, underwrites the buyer before the order is placed, and the buyer knows it is paying the provider. Factoring is typically arranged after invoices exist, prices the facility on drawn funds, and in a notified facility your buyer is told to remit to the factor.
Does non-recourse mean I am guaranteed to be paid?
No. Non-recourse means the provider absorbs the loss if an approved buyer fails to pay, but cover is conditional on the invoice being within the approved limit, the goods being delivered, and no dispute being raised. Disputed invoices are excluded in almost every agreement, and disputes are a common precursor to non-payment, so read the exclusions before relying on the cover.
How do I set a credit limit for a store I know nothing about?
Open at an amount you could write off without damage, typically a single order, and treat it as a test rather than an assessment. Collect trade references and ask those suppliers for average days beyond terms rather than a general opinion. Raise the limit after three clean payment cycles, and keep the ceiling enforced in the order system rather than as a note.
Can I charge interest on late payments?
Generally yes if your credit agreement provides for it, but the enforceable rate and the recoverability of collection costs depend on the governing state law and on the clause being reasonable. Clauses that look punitive relative to actual loss can be challenged. Have the terms reviewed by an attorney in the relevant state rather than relying on a template.
What does a B2B pay later provider actually charge?
Pricing is normally a discount rate on invoice value that scales with term length and buyer risk, sometimes with setup fees, monthly minimums or per transaction charges on top. Rates are negotiated per merchant and shift with market conditions, so published figures are indicative at best. Get a written quote reflecting your own volume, average invoice size and buyer mix.
Should I pass the pay later fee on to my buyer?
It depends on category convention. In segments where extended terms are already treated as a priced service, a visible terms fee is accepted without much friction. In segments where terms are considered part of the offer, passing the fee on reads as a price increase. Testing it on a subset of accounts is more reliable than guessing.
How does a credit hold work without damaging the relationship?
Apply it by written policy at a fixed number of days past due, notify the buyer plainly, and make clear that open orders resume as soon as the account clears. Because it is reversible and consistent, it reads as process rather than punishment. The brands that get this wrong are the ones that apply it selectively and late, which is when it feels personal.
Is trade credit insurance worth it for a small brand?
It depends on concentration more than size. A brand whose top three accounts represent most of its receivables has a genuine single-point-of-failure risk that insurance addresses. A brand with a long tail of small independents is usually better served by tight limits and disciplined collections, since premiums and per-buyer limit fees scale poorly across many small accounts.