Net terms for building and trade supplies
Trade accounts are how builders buy. Terms Due gives your Shopify trade counter the account controls a merchant branch takes for granted.
Who your buyers are
Builders, contractors, electricians, plumbers and small firms who expect a trade account from day one and treat the account like a merchant's: order what the job needs, pay when the job pays. Balances swing with the work. A good customer can owe nothing for a month and then $8,000 for a kitchen fit-out.
The classic merchant problem is the customer whose job has gone wrong and who keeps buying for the next job while the last one is unpaid. Merchants solved it decades ago with account limits and stop lists. Terms Due does the same thing for a Shopify store.
What goes wrong
- Accounts opened at the counter with a name and a van, no checks.
- Balances that spike with a big job and stay there.
- Customers who pay the merchant who chases hardest, and not the others.
- Statements expected on the 1st and chased on the 20th, by hand.
- A customer going under with three suppliers' stock on site.
Before and after
Before
- Trade account on request, no limit, no application.
- Invoices by email to a van.
- Next job's materials shipped while the last job is unpaid.
- Interest never charged because nobody worked it out.
With Terms Due
- Account opened after a credit application, with a limit.
- Text to the tradesperson's phone on the due date with a pay link.
- Stop list applied automatically at 14 days, lifted on payment.
- Statutory interest and compensation shown on the statement for UK accounts.
Suggested starting settings
| Setting | Suggested | Why |
|---|---|---|
| Terms | Net 30, end of month following for larger firms | Matches how the trade expects to pay |
| Default limit | $2,000 to $5,000, raised per job on request | Room for a normal job, not three |
| New accounts | Application with two references; first job on a card | Vans are not references |
| Grace period | 14 days | One statement cycle |
| Reminders | Text at 0, 7, 14; email alongside with the statement | Trades live on their phones |
| Interest (UK) | On | The trade expects it from merchants already |
Worked example
The kitchen fitter and the next job
A fitter has a $4,000 limit and runs up $3,800 on a job in March. The customer is slow to pay him, so he is slow to pay you. At day 14 the account goes on hold. In April he tries to order $2,600 for the next job and checkout stops: $3,800 overdue, pay link, hold lifts on payment. He pays $2,000 on the phone by card and asks for a week on the rest; you release the order once, and the remaining $1,800 is paid by the day-30 notice. Exposure never exceeded $4,400, and the fitter is still a customer.
| Limit | $4,000 |
|---|---|
| Overdue at hold | $3,800 |
| Next order attempted | $2,600 |
| Paid to release | $2,000, then $1,800 within the month |
| Peak exposure | $4,400 |
Questions
Can I raise a limit temporarily for a big job?
Yes, with a date. Raise it for the job and let it drop back when the job's invoices are paid.
Most of my customers are sole traders. Does interest still apply?
In the UK, yes, when they bought in the course of business. The compensation per invoice applies too.
We also sell to the public. Does the hold affect retail customers?
No. Holds and limits only apply to B2B companies ordering on payment terms. Retail checkout is untouched.
Related
UK late payment interest
Terms Due works out statutory interest and fixed compensation under the UK Late Payment of Commercial Debts Act on overdue Shopify B2B invoices.
Read moreCredit application checklist
What to put on a wholesale credit application form, how to check the answers, red flags to watch for and how to set the first limit, with a checklist.
Read moreWhen a customer will not pay
The steps after the final notice: stopping supply, payment plans, letters before action, collection agencies, small claims and knowing when to write a debt off.
Read moreStop chasing wholesale invoices by hand
Install Terms Due, set a credit limit for each buyer and let the app hold, remind and collect.
Install on Shopify