Oct 22, 2025
Updated on October 21, 2025
Medical and healthcare supplies vendors operate in an industry where extended payment terms have become not just common but often mandatory for doing business with major healthcare organizations.
With many large pharmaceutical and life sciences buyers utilizing extended payment terms (typically net 60–90), though these terms vary by company and contract, and hospitals facing $130 billion in underpayments from Medicare and Medicaid in 2025 alone (American Hospital Association, 2025), the need to provide flexible payment options while preserving financial stability has never been more essential.
Net 30, 60, and 90 payment terms represent both a competitive necessity and a significant cash flow challenge that requires strategic management through proper credit evaluation, automation, and potentially working capital solutions like those offered by Resolve's B2B net terms platform.
Key Takeaways
- Extended payment terms have become increasingly common in pharmaceutical and large healthcare vendor relationships, representing a significant shift from historical 30-day payment norms
- Medical supplies vendors face a cascading payment delay effect as healthcare providers themselves experience 60-90+ day reimbursement cycles from insurance companies
- Offering net terms drives sales growth by removing immediate payment barriers for healthcare customers managing their own cash flow constraints
- Extended payment terms require sophisticated cash flow management, including automated AR processes, credit checks, and potentially advance payment solutions
- According to the 2023 InstaMed report, many healthcare providers still rely on paper and manual collection processes despite strong consumer preference for digital payment options, creating efficiency opportunities
- Medical supplies vendors can maintain competitive positioning while protecting cash flow through tiered payment term strategies and strategic use of working capital tools
What Are Net 30, Net 60, and Net 90 Payment Terms?
Net terms represent deferred payment agreements specifying the number of days a customer has to pay after receiving an invoice. In the medical and healthcare supplies context, these arrangements provide crucial trade credit that allows healthcare organizations to receive necessary supplies immediately while managing their complex reimbursement cycles.
Net 30: Payment due within 30 days of invoice date
Net 60: Payment due within 60 days of invoice date
Net 90: Payment due within 90 days of invoice date
The term "net" indicates the full amount is due without deductions, unless early payment discounts are offered (such as "2% 10 net 30," meaning a 2% discount for payment within 10 days, otherwise full payment due in 30 days).
How Net Terms Work in Medical Supply Transactions
In medical supply transactions, net terms have evolved beyond simple courtesy into competitive requirements. The healthcare ecosystem operates on extended payment cycles due to the multi-layered reimbursement process involving patient registration, insurance claim submission, adjudication, and final payment. This creates inherent delays where healthcare providers identify collecting payments as a primary concern, with many unable to meet their own financial obligations promptly.
For medical supplies vendors, this means your hospital, clinic, or practice customers are often managing their own 60-90 day cash conversion cycles while needing to maintain inventory of essential supplies. Net terms help bridge this gap by allowing healthcare providers to stock necessary equipment and supplies without immediate cash outlay.
Common Payment Terms in Healthcare Distribution
According to the Institute of Finance & Management (IOFM), payment terms in the pharmaceutical industry vary by company and are often influenced by factors such as vendor relationships and negotiation outcomes. For instance, PPD typically offers net 60-day terms to vendors, while Novartis extends terms up to net 90 days. These extended payment terms are part of broader industry practices where companies aim to optimize cash flow and manage working capital effectively.Payment terms in B2B commerce vary significantly by industry, region, and company size, with healthcare showing a pronounced concentration on longer terms, particularly when serving large hospital systems, pharmaceutical companies, and clinical research organizations that have institutionalized extended payment cycles throughout their vendor networks.
Why Medical Supply Vendors Offer Net Payment Terms
Offering net terms provides medical supplies vendors with significant competitive advantages in an industry where flexible payment options are increasingly expected and often required. Business owners who offer net terms are able to drive more sales than those that do not because they're able to sell to clients that have cash flow problems, using trade credit to gain competitive advantage over peers who refuse to be as flexible.
Net Terms as a Competitive Differentiator for Medical Suppliers
In markets where net terms are standard practice, not offering them puts companies at a significant disadvantage. Healthcare procurement professionals often have non-negotiable requirements for extended payment terms, particularly when dealing with large organizations that have standardized their vendor payment policies. Medical supplies vendors who can accommodate these requirements gain access to customers who might otherwise be forced to work with competitors.
The competitive pressure is particularly intense when serving:
- Large hospital systems with established vendor payment policies
- Pharmaceutical and biotechnology companies with standardized extended payment terms
- Group purchasing organizations (GPOs) whose contracts often specify negotiated payment terms, which may include extended terms depending on the agreement
- Healthcare facilities managing complex insurance reimbursement cycles
How Payment Terms Drive Repeat Orders from Healthcare Buyers
Net terms foster stronger, longer-lasting customer relationships by demonstrating understanding of the unique financial challenges in healthcare. When vendors make their clients' operations easier through flexible payment arrangements, customers are more likely to continue doing business with them and may recommend the vendor to other healthcare organizations.
This relationship-building is particularly valuable in healthcare, where providers face significant operational challenges including staffing shortages, increasing labor costs, and difficulties collecting large patient balances. Vendors who can accommodate these financial pressures through flexible payment terms become trusted partners rather than just suppliers.
Net 15 Payment Terms for Medical Supply Transactions
While extended terms dominate healthcare, Net 15 payment terms serve important niche applications in the medical supplies industry. These shorter payment cycles are particularly valuable for:
- Emergency medical equipment orders requiring immediate delivery and payment certainty
- Small clinic buyers with established payment history and limited credit needs
- Lower-risk scenarios where vendors want to minimize days sales outstanding (DSO)
- Urgent supply orders for high-turnover items like PPE or basic medical consumables
When to Offer Net 15 vs. Longer Terms
Net 15 terms work best when you have high confidence in customer payment reliability and need to accelerate cash conversion. This might include:
- Established customers with 2+ years of perfect payment history
- Smaller medical practices with consistent patient volumes and diverse payer mix
- Orders under a certain threshold where credit risk is minimal
- Situations where you need to maintain your own payment obligations to suppliers
Net 15 for Smaller Medical Practices
Some smaller medical practices may have relatively predictable cash flows, but reimbursement cycles vary widely by payer mix and revenue cycle management processes. These practices may appreciate shorter payment windows as they can help maintain better financial discipline while still providing a brief grace period for payment processing.
Managing Cash Flow When Offering Extended Net Terms
The most significant challenge of offering extended net terms is managing your own cash flow during the 30-90 day payment window. Decreased financial velocity is the most common challenge when offering net terms, as customers taking longer to pay affects working capital and may prevent vendors from securing early payment discounts from their own suppliers.
How Advance Payment Protects Vendor Cash Flow
Advance payment solutions address this cash flow gap by converting your accounts receivable into immediate working capital. With Resolve's B2B Net Terms platform, vendors can receive advance payment on approved invoices, often within 24 hours, while customers still maintain their full 30, 60, or 90-day payment window (as advertised by Resolve; terms subject to provider conditions including potential exceptions for fraud or disputes). This non-recourse financing means advances are non-recourse, transferring the majority of payment risk to Resolve.For medical supplies vendors, this means you can:
- Maintain inventory levels without cash flow constraints
- Take advantage of supplier early payment discounts
- Fund operational expenses during extended payment cycles
- Scale sales without proportionally increasing working capital requirements
Automating Receivables to Reduce DSO
Beyond advance payment solutions, automating your accounts receivable processes can significantly reduce days sales outstanding (DSO) and minimize administrative burden. According to APQC's 2023 Accounts Payable benchmarks, manual invoice processing can substantially increase costs compared to automated systems, while automated systems streamline the entire receivables lifecycle.
Resolve's accounts receivable automation platform uses AI agents to manage workflows, automate payment reminders, and reduce friction in collections. This automation is particularly valuable in healthcare, where invoice exceptions and errors can significantly extend payment cycles.
Credit Checks and Risk Management for Healthcare Buyers
Before extending net terms to healthcare buyers, thorough credit evaluation is essential to mitigate bad debt risk. The challenges of patient balance collection, including increasing financial constraints on patients and issues with insurance claim denials, have led to payment delays and reduced cash flow for healthcare organizations. These collection difficulties can cascade throughout the supply chain, affecting vendors' payment reliability and overall financial stability.
Smart Credit Checks for Medical Supply Customers
Resolve's business credit check services provide personalized assessments free of charge, requiring only a customer's business name and address. Resolve's experts—formerly of Amazon, PayPal, and Fortune 500 firms—deliver deeper credit insights than traditional bureaus, evaluating thousands of data points to generate dynamic, scalable credit decisions within 24 business hours.
For medical supplies vendors, this means you can quickly assess:
- Hospital system financial stability and payment history
- Clinic revenue streams and insurance reimbursement patterns
- Practice management company creditworthiness
- Healthcare organization regulatory compliance and licensing status
Reducing Bad Debt in Healthcare Supply Distribution
Effective risk management in healthcare supply distribution requires understanding the unique financial pressures facing your customers.
According to the American Hospital Association (AHA), hospitals absorbed $130 billion in underpayments from Medicare and Medicaid in 2023 alone. Medicare reimbursement covered just 83 cents for every dollar spent by hospitals in 2023. These shortfalls are worsening, growing on average 14% annually between 2019 and 2023.These systemic financial challenges mean even well-intentioned healthcare organizations may struggle with timely payments.
To mitigate this risk, medical supplies vendors should:
- Establish tiered credit limits based on customer financial strength
- Require personal guarantees for smaller practices or new customers
- Monitor customer payment performance and adjust terms accordingly
- Consider non-recourse financing to transfer payment risk
Integrating Net Terms into Medical Supply Ecommerce Platforms
For medical supply vendors with online storefronts, embedding net terms directly into the ecommerce checkout process can significantly increase conversion rates and average order values. Buy now pay later and net terms options are proven to increase sales volume and customer retention, with some purchases qualifying for instant approvals.
Embedded Net Terms at Online Checkout
Resolve's net terms for ecommerce solution integrates seamlessly with popular platforms including Shopify, BigCommerce, Magento, and WooCommerce. This allows healthcare buyers to apply for net terms directly at checkout, with instant approvals for qualified customers.
The integration process includes:
- Checkout extensions that enable buyers to select net 30, 60, or custom terms
- Instant credit approvals for qualified purchases
- White-label payment portal maintaining your brand identity
- Automatic QuickBooks synchronization for streamlined bookkeeping
Instant Approval for Medical Supply Orders
The ability to provide instant credit approvals removes significant friction from the B2B purchasing process. Healthcare buyers no longer need to go through lengthy credit application processes or wait for manual approval before completing their orders. This immediacy is particularly valuable for:
- Emergency supply replenishment
- Seasonal inventory stocking
- New customer acquisition
- Large equipment purchases
Automating Invoicing and Collections for Medical Supply Vendors
Effective accounts receivable management is critical for medical supplies vendors operating with extended payment terms. According to the 2024 CAQH Index, healthcare organizations have substantial opportunities to reduce administrative costs through digital transformation and automation, making AR automation essential for accuracy and efficiency.
AI Agents for Payment Reminders and Collections
Resolve's Net Terms Management platform automates the time-consuming tasks of payment reminders, servicing, and collections. AI-powered workflows ensure consistent follow-up on overdue accounts while maintaining professional customer relationships.
Key automation features include:
- Automated payment reminders at predetermined intervals
- Escalation workflows for seriously past-due accounts
- Real-time payment tracking and reconciliation
- Proactive DSO monitoring and reporting
Reconciling Net Terms Invoices in QuickBooks
Seamless integration with accounting software is essential for maintaining accurate financial records. Resolve automatically records and syncs all transactions to QuickBooks, ensuring your accounts receivable ledger remains accurate without manual data entry.
This integration provides:
- Real-time transaction synchronization
- Automatic invoice-to-payment matching
- Accurate DSO and aging schedule reporting
- Streamlined month-end closing processes
Offering Net Terms Without Sacrificing Your Bottom Line
The economics of offering net terms must be carefully managed to ensure profitability. As advertised by Resolve, their fees vary based on the specific solution and risk profile, with pricing structured around advance rates and payment terms. Their alternative to factoring option provides flat-rate pricing for invoice advances with non-recourse terms.
Understanding Advance Pay Fees and Rates
Fees for advance payment solutions vary based on risk profiles and advance rates:
- Risk-based pricing that reflects customer creditworthiness
- Variable pricing based on payment term length (30, 60, or 90 days)
- Advance rates that may range from 50% to 100% based on customer risk profile
- Transparent fee structures that allow vendors to calculate costs upfront
Non-Recourse Financing Explained for Medical Vendors
With non-recourse financing, medical supplies vendors gain:
- Protection against bad debt losses
- Reduced collection expenses and administrative burden
- Ability to offer competitive payment terms without cash flow risk
- Focus on core business operations rather than credit management
White-Label Payment Portals and Customer Experience
Maintaining your brand identity throughout the payment process is essential for customer relationship management. Resolve's B2B payments platform provides a white-label payment portal that accepts ACH, credit card, wire, or check payments while maintaining your brand identity.Accepting Multiple Payment Methods Through One Portal
A unified payment portal simplifies the customer experience while expanding payment options. Healthcare buyers can choose their preferred payment method without requiring separate processes for each option, reducing friction and improving payment reliability.
Available payment methods include:
- ACH transfers for cost-effective, reliable payments
- Credit card processing for customers needing additional financing
- Wire transfers for large international transactions
- Check payments for organizations with legacy payment processes
Maintaining Your Brand During the Payment Process
White-label payment portals ensure your customer relationships remain under your control. Resolve handles the payment processing, collections, and risk management while your brand remains front and center throughout the customer experience.
This approach allows medical supplies vendors to:
- Maintain direct customer relationships
- Provide consistent brand experience across all touchpoints
- Offer flexible payment options without operational complexity
- Focus on sales and service rather than payment processing
Best Practices for Medical and Healthcare Supply Vendors Offering Net Terms
Successful net terms programs require strategic planning and disciplined execution. Medical supplies vendors should implement tiered payment term strategies based on customer risk profiles and business relationships.
Setting Credit Limits by Customer Type
Different healthcare customer types warrant different credit approaches:
- Large hospital systems: Extended payment terms with higher credit limits, thorough due diligence
- Mid-sized clinics: Moderate payment terms with moderate credit limits, regular performance reviews
- Small practices: Shorter payment terms with conservative credit limits, personal guarantees
- New customers: Start with Net 15-30 terms, extend based on payment performance
Tiering Payment Terms Based on Order Size and Buyer Risk
Payment terms should also reflect order characteristics and risk factors:
- Emergency orders: Shorter terms (Net 15-30) for payment certainty
- Large equipment purchases: Longer terms (Net 60-90) to facilitate buying decisions
- High-risk customers: Lower advance rates, shorter terms, additional security
- Established relationships: More flexible terms based on proven payment history
Competing with Amazon Medical Supplies and Large Online Marketplaces
Independent medical supplies vendors face intense competition from Amazon and other large online marketplaces that offer extensive product catalogs and fast shipping. However, offering net terms is like being the bank for your customers, providing a service that large marketplaces often cannot match.
How Net Terms Differentiate Independent Medical Suppliers
While Amazon may offer competitive pricing and fast delivery, they typically require immediate payment, creating a significant advantage for independent vendors who can offer flexible payment terms. This differentiation is particularly valuable for:
- Healthcare organizations with complex procurement requirements
- Customers needing specialized products or technical support
- Buyers requiring custom configurations or bulk pricing
- Organizations valuing personal relationships and local support
Winning Back Customers from Amazon with Flexible Credit
Resolve's Resolve for Sellers platform enables independent medical supplies vendors to compete effectively by providing buyers with the credit they need to expand their budgets and make larger purchases. Resolve pays you upfront for the Net 30-60 terms billed to your customers, while taking on billing, collections, and repayment risk.This approach allows independent vendors to:
- Match or exceed the payment flexibility of large competitors
- Build stronger customer relationships through personalized service
- Offer specialized products and expertise that marketplaces cannot provide
- Maintain competitive pricing while protecting cash flow
Case Study: How a Medical Supply Wholesaler Could Scale with Net 60 Terms
Consider a hypothetical mid-sized medical supply wholesaler serving independent clinics and small hospitals. The company traditionally requires Net 30 terms but finds itself losing customers to vendors offering Net 60 and Net 90 options.
By implementing a B2B net terms platform with advance payment capabilities, such a wholesaler could potentially:
- Extend payment terms to Net 60 for qualified customers without cash flow impact
- Increase average order values as customers can afford larger purchases
- Reduce DSO through automated collections and payment reminders
- Grow revenue while maintaining healthy cash flow
- Reduce administrative overhead through AR automation
Frequently Asked Questions
What is the difference between Net 30, Net 60, and Net 90 payment terms?
Net 30, 60, and 90 payment terms refer to the number of days a customer has to pay after receiving an invoice. Net 30 means payment is due within 30 days, Net 60 within 60 days, and Net 90 within 90 days. The "net" indicates the full amount is due without deductions, unless early payment discounts are offered. In healthcare, extended payment terms have become increasingly common for large organizations, while smaller practices may work with Net 30-60 terms.
How do medical supply vendors get paid immediately when offering Net 60 terms?
Medical supply vendors can receive immediate payment through advance payment solutions like Resolve's B2B net terms platform, which can advance a significant portion of invoice value for approved customers. The vendor gets paid quickly while the customer maintains their full payment window. This non-recourse financing transfers the majority of payment risk to the financing provider while protecting the vendor's cash flow.
What credit checks are required before extending net terms to healthcare buyers?
Before extending net terms, medical supplies vendors should conduct thorough credit evaluations including business credit reports, financial statement analysis, trade references, and verification of healthcare licenses and accreditations. Platforms like Resolve provide business credit checks requiring only the customer's business name and address, delivering results within 24 hours using proprietary credit models.
Can I integrate net payment terms into my online medical supply store?
Yes, net payment terms can be integrated into online medical supply stores through B2B commerce platforms. Solutions like Resolve's net terms for ecommerce integrate with popular platforms including Shopify, BigCommerce, Magento, and WooCommerce, allowing healthcare buyers to apply for and receive approval for net terms directly at checkout.
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.
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