Electronics distributors operate in a high-velocity industry where cash flow timing can make or break business relationships. With the electronics sector’s median DSO around 76 days and global average DSO of approximately 59 days, offering net payment terms has become both a competitive necessity and a significant operational challenge.
For electronics and electrical components distributors, extending Net 30, 60, or 90 terms creates opportunities for growth while introducing complex credit management and cash flow considerations. This guide explores how to implement and optimize net terms programs that drive sales without compromising financial stability, with strategic integration of B2B net terms automation to streamline operations.
Net payment terms represent the fundamental credit arrangement in B2B transactions, specifying when customers must remit payment after receiving goods or services. Net 30 means payment is due 30 days from the invoice date, while Net 60 and Net 90 extend this period to 60 and 90 days respectively. Unlike consumer credit cards where financial institutions bear the risk, B2B net terms place the credit extension responsibility directly on the selling company.
For electronics distributors, this creates a unique challenge: the industry's complex supply chains and project-based purchasing patterns often necessitate extended payment terms, yet the median DSO of 58 days suggests significant payment delays even when shorter terms are offered. This disconnect between stated terms and actual payment behavior requires careful management.
The electronics distribution landscape is characterized by:
Early payment discounts, typically structured as "2/10 net 30," add another layer of complexity. This format offers a 2% discount for payment within 10 days, with full payment due within 30 days. This creates a strategic tool for distributors to incentivize faster payments while maintaining the flexibility of standard net terms for customers who need the full payment period.
Major electronics distributors like DigiKey, Mouser Electronics, and Arrow Electronics have established sophisticated net terms programs that balance customer acquisition with risk management. According to their published credit policies, these industry leaders typically require formal credit applications, trade references, and financial documentation before approving credit limits.
DigiKey's credit program, for example, involves:
Mouser Electronics follows similar protocols but often offers more flexible initial terms for established businesses, 41% of electronics component buyers want higher credit limits and longer payment terms. This competitive pressure forces smaller distributors to consider net terms offerings or risk losing business to larger competitors.
The standard approach among major distributors includes:
(Note: Specific terms and credit policies vary by distributor—consult each distributor's official credit application pages for current requirements.)
For smaller distributors, replicating these sophisticated programs manually is often impractical due to resource constraints. This creates an opportunity for automated solutions that provide enterprise-level credit management capabilities without the overhead.
While Net 30 remains the industry standard, some electronics component suppliers offer Net 15 terms to accelerate cash flow or attract customers who value faster payment cycles. Net 15 terms require payment within 15 days of invoice date, creating tighter cash conversion cycles for both buyer and seller.
Net 15 terms are most appropriate when:
However, Net 15 terms may limit market reach, as many electronics manufacturers and contractors operate on longer project cycles that require 30-60 day payment flexibility. The decision between Net 15 and Net 30 often comes down to the specific customer segments being served and the distributor's own cash flow requirements.
Converting from Cash on Delivery (COD) to Net terms represents a significant strategic shift. This transition typically follows this progression:
This conservative approach minimizes risk while gradually building credit relationships. ResolvePay's B2B Net Terms solution automates net terms offering with real-time credit decisions for component buyers, enabling distributors to implement this progression without manual credit assessment overhead.
Major distributors may extend Net 60 terms to qualified customers with established payment histories and strong financial positions. Net 60 terms are particularly valuable for:
However, extending Net 60 terms significantly increases credit risk and cash flow pressure. With actual payment times often extending beyond stated terms, Net 60 terms could realistically extend to 12+ weeks in practice.
Effective Net 60 management requires:
ResolvePay's Business Credit Check provides free credit assessments that help distributors evaluate buyers for extended 60-day terms without the cost and complexity of traditional credit bureau services. This enables smaller distributors to offer competitive Net 60 terms while maintaining appropriate risk controls.
Implementing net terms manually creates significant operational overhead for electronics distributors managing hundreds or thousands of customer accounts. Automated net terms systems address this challenge by streamlining the entire credit-to-cash workflow.
Key automation components include:
For electronics distributors, automation is particularly valuable because:
ResolvePay's Accounts Receivable with AI-Powered Automation streamlines credit, invoicing, and collections for electronics distributors managing multiple payment terms. The platform's AI agents manage workflows, automate payment reminders, and reduce friction in collections while ensuring accurate reconciliation across all invoice structures.
Effective credit assessment is the foundation of successful net terms programs. Electronics distributors must balance the need to approve credit quickly with the requirement to minimize bad debt risk. Traditional credit assessment methods include:
However, traditional methods have significant limitations:
Modern credit assessment leverages alternative data sources and real-time analytics to provide more accurate and timely decisions. This includes:
The goal is to move from reactive credit management to proactive risk assessment that enables faster customer onboarding while maintaining appropriate safeguards. Given that B2B write-offs average 1.1% of total B2B invoices in the US, proper credit assessment directly impacts bottom-line profitability.
RS (RS Group), as a global electronics distributor, demonstrates sophisticated payment terms management that addresses the complexities of international B2B commerce. Their approach includes:
For electronics distributors operating internationally, RS's model highlights several key considerations:
Even domestic distributors can benefit from adopting these best practices by:
Arrow Electronics represents the enterprise end of the electronics distribution spectrum, with sophisticated net terms programs designed for large manufacturing customers. Their approach includes:
For smaller distributors, replicating Arrow's enterprise approach isn't practical, but several principles can be adapted:
The key insight from Arrow's model is that net terms should be part of a broader value proposition, not just a payment accommodation. By integrating credit terms with other services like inventory management, technical support, and supply chain optimization, distributors can justify extended payment terms while maintaining strong customer relationships.
The fundamental challenge of net terms is the cash flow gap they create between paying suppliers and receiving customer payments. With electronics sector median DSO of 58 days, distributors offering Net 30 terms may actually wait nearly twice as long for payment.
Effective cash flow management strategies include:
ResolvePay's Better Than Factoring solution provides non-recourse financing with competitive rates for 30-day terms (pricing current as of publication date—see ResolvePay's Better Than Factoring page for current rates) with high advance rates on approved invoices. This eliminates the cash flow gap while transferring payment risk to ResolvePay, allowing distributors to offer competitive net terms without compromising their own financial stability.
The non-recourse nature of ResolvePay's financing is particularly valuable because it means distributors don't bear the risk of customer defaults. All cash advances are non-recourse, so what you get is always yours to keep, regardless of whether customers ultimately pay their invoices.
Successful net terms implementation requires seamless integration with existing business systems. Electronics distributors typically operate complex technology stacks including:
Integration challenges include:
ResolvePay's Integrations with Financial Tech Stack connects with QuickBooks and other platforms as listed on ResolvePay's integrations page for seamless payment reconciliation. The platform's flexible APIs ensure that net terms workflows integrate smoothly with existing systems, eliminating manual data entry and reducing errors.
For electronics distributors, this integration is critical because:
Standard net terms typically start with Net 30 for qualified customers, with Net 60 available for established accounts with strong payment histories. Major distributors generally offer Net 30 as their baseline, matching terms to customer creditworthiness and payment history rather than offering extended terms universally.
Qualifying for Net 60 typically requires demonstrating strong financial stability, consistent payment history, and significant purchasing volume. Most distributors require a formal credit application, business verification, trade references, and sometimes financial statements. New customers usually start with Net 30 and can request Net 60 after 6-12 months of timely payments.
Yes. Use credit controls and cash flow discipline. Start new customers on Net 30 with lower limits, then increase based on on-time payments. Automate credit checks and A/R to cut manual work and speed decisions. Use early-pay discounts like 2/10 net 30 to accelerate receipts. Consider non-recourse financing to remove default risk while keeping cash coming in via invoice advances.
Reduce DSO through automated payment reminders, early payment discounts (such as 2/10 net 30), regular credit limit reviews, and non-recourse financing to eliminate cash flow gaps. Focus on customers with the longest payment cycles first, implement stricter credit controls for new accounts, and monitor DSO regularly against the industry benchmark of 58 days.
This post is to be used for informational purposes only and does not constitute formal legal, business, or tax advice. Each person should consult his or her own attorney, business advisor, or tax advisor with respect to matters referenced in this post. Resolve assumes no liability for actions taken in reliance upon the information contained herein.