Industrial equipment suppliers face a unique challenge: customers need high-cost machinery to deliver projects, but lack upfront cash to buy it, which is why financing or leasing is common.
Net payment terms provide the solution—allowing buyers to defer payment while suppliers maintain cash flow. With 85% of B2B buyers preferring to purchase on credit rather than pay immediately, offering net terms has become essential for competitive industrial suppliers. However, managing these extended payment cycles requires strategic planning to avoid cash flow strain.
Resolve's B2B Net Terms platform helps industrial equipment suppliers offer flexible payment options while getting paid upfront, eliminating the traditional trade-off between sales growth and cash flow stability.
Net terms represent a fundamental agreement in B2B commerce where payment is due a specific number of days after the invoice date. Net 30 means payment is due within 30 days, Net 60 allows 60 days, and Net 90 provides a 90-day payment window.
For industrial equipment suppliers, these terms function as trade credit that enables customers—often contractors, manufacturers, or construction firms—to purchase necessary equipment without immediate capital outlay.
The mechanics are straightforward: when you deliver equipment or components, you issue an invoice with clearly stated payment terms (e.g., "Net 30"). The payment due date is calculated from the invoice date, not the delivery date, unless otherwise specified in your contract. During this grace period, your customer can deploy the equipment to generate revenue before settling their obligation to you.
The choice between Net 30, 60, or 90 terms depends on several factors specific to industrial equipment sales:
According to industry data, 31% of companies across manufacturing and service sectors use 45-day payment terms, while 30% use 30-day terms and 27% use 60-day terms. However, the industrial equipment sector often requires longer terms due to the capital-intensive nature of purchases and project-based revenue cycles.
Industrial equipment suppliers employ various payment structures beyond standard net terms to accommodate different transaction types and customer needs:
For industrial suppliers dealing with large equipment orders, partial payment options can significantly improve cash flow. Companies offering partial payment options see 20% faster invoice settlement time compared to traditional full-payment methods.
The choice between COD and net terms often depends on customer relationship stage and risk assessment. While COD eliminates payment risk, it may limit sales opportunities with creditworthy customers who prefer payment flexibility.
As one financial expert notes, "The best invoice payment terms are the ones that provide enough cash to keep your business running while carefully considering your clients' needs."
Calculating accurate payment due dates is essential for effective accounts receivable management. The standard method counts calendar days from the invoice date:
Some businesses specify "business days only," which excludes weekends and holidays, but this should be explicitly stated on the invoice. Most industrial equipment suppliers use calendar days for simplicity.
Effective payment tracking requires systematic monitoring through:
Construction companies' days sales outstanding ranges from 51 to 83 days on average, indicating that even with Net 30 terms, actual payment often occurs much later. This reality underscores the importance of proactive payment tracking and collections management.
Resolve's AI-powered accounts receivable automation platform streamlines this entire process by automating payment reminders, collections workflows, and reconciliation, reducing DSO while maintaining customer relationships.
Offering net terms provides significant strategic advantages for industrial equipment suppliers:
The impact is substantial—businesses that offer net terms are generally able to drive more sales than those that don't because they can sell to clients with cash flow problems, effectively using trade credit to gain competitive advantage.
For industrial equipment suppliers specifically, net terms align with customer business cycles. Construction and manufacturing firms often operate on project-based revenue models where they receive payment only after completing work or delivering products. By offering Net 60 or Net 90 terms, suppliers enable these customers to purchase necessary equipment at the start of projects.
Resolve's B2B Net Terms solution enhances these benefits by advancing up to 100% of invoice value within 24 hours, allowing suppliers to offer flexible terms while maintaining immediate cash flow.
A robust payment infrastructure is essential for managing net terms effectively. Industrial equipment suppliers should implement systems that accommodate multiple payment methods while streamlining reconciliation:
A modern payment portal should provide customers with a branded, self-service experience that accepts all major payment methods while automatically reconciling payments to invoices. As payment experts note, "When defining acceptable methods in your payment terms, make it as convenient as possible for your clients... letting clients pay their preferred way gets you paid faster."
Resolve's B2B Payments Platform provides industrial suppliers with a white-label payment portal that accepts ACH, credit card, wire, or check payments, with automatic reconciliation and QuickBooks integration to eliminate manual bookkeeping.
Professional invoice templates are crucial for clear communication of payment terms and expectations. Essential components for industrial equipment invoices include:
Customizing templates for equipment sales might include warranty information, installation requirements, or maintenance schedules—details that add value while reinforcing the professional relationship.
Managing credit risk is paramount when offering extended payment terms. Industrial equipment suppliers face significant exposure, as 60% of construction material invoices are paid late, with small businesses waiting an average of 14 days beyond agreed terms.
Trade credit insurance and non-recourse financing options provide protection against customer defaults:
Resolve's non-recourse financing model functions as modern trade credit insurance by advancing payment upfront while assuming the majority of credit risk. All cash advances are non-recourse, meaning what you receive is always yours to keep, regardless of whether your customer ultimately pays.
This approach is particularly valuable for industrial suppliers dealing with smaller contractors or new customers where credit history may be limited or difficult to assess.
While this guide focuses on suppliers offering net terms, industrial businesses also need reliable suppliers who can provide equipment when needed. When evaluating potential suppliers, consider:
For industrial equipment buyers seeking suppliers with flexible payment options, Resolve's Business Credit Check service can help verify supplier reliability. This free service delivers instant, data-rich credit decisions using only a business name and address, helping you identify suppliers with strong financial standing.
International industrial equipment transactions add complexity to net terms management:
For global transactions, consider shorter net terms (Net 15 or Net 30) to minimize currency and payment timing risks. Alternatively, use forward contracts to lock in exchange rates for larger equipment orders.
Manual net terms management becomes unsustainable as sales volume grows. Automation provides significant benefits:
Resolve's Net Terms Management platform automates the time-consuming tasks of payment reminders, servicing, and collections while syncing with QuickBooks for seamless financial reporting. This automation reduces administrative overhead while improving cash flow through systematic collections processes.
With 55% of all B2B invoiced sales in the US overdue, systematic automation isn't just convenient—it's essential for maintaining healthy cash flow in industrial equipment supply businesses.
Net 30 means the full invoice amount is due within 30 days of the invoice date. 2/10 net 30 offers a 2% discount if the customer pays within 10 days, with the full amount due in 30 days if they don't take the discount. This structure incentivizes early payment while providing a longer payment window as a backup option.
The due date is calculated as 30 calendar days from the invoice date, unless your terms specifically state "business days only." For example, an invoice dated March 15 with Net 30 terms would be due April 14. Always clarify your calculation method in your terms and conditions to avoid disputes.
Industrial equipment suppliers should offer longer terms (Net 60 or Net 90) when dealing with construction, manufacturing, or project-based customers who have extended revenue cycles. Since construction firms wait 94 days on average to get paid, Net 90 terms align with their actual cash flow patterns. However, always assess customer creditworthiness before extending longer terms.
When customers don't pay within agreed terms, standard practice includes sending payment reminders, applying late fees (if specified in your terms), and potentially escalating to collections. Around 60% of construction material invoices are paid late, so having a systematic approach to late payments is essential. Consider using non-recourse financing options that protect your cash flow regardless of customer payment timing.
While net 30 calculators work for date calculations in international transactions, they don't account for currency exchange risks, international payment processing delays, or compliance requirements. For international deals, consider shorter terms or currency hedging strategies to manage these additional complexities.
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.