If you are a new business, a Net 30 credit account can feel like a golden ticket. What happens is you get the supplies you need now without even paying for 30 days. Even if Net 30 terms can be a powerful financial tool, especially when you are buying business supplies or office essentials, most entrepreneurs misuse them.
From most of the overlooked payment deadlines to poor credit management, here are some top mistakes new businesses make with their business supplies credit account.
1. Believing “30 Days” Means Calendar Days Only
Mistake: Some people think that Net 30 means a flat 30 calendar days, no matter what.
However, the truth is that if your due date lands on a weekend or federal holiday, some vendors still expect payment on that exact date. But most of the vendors shift it to the next business day. It can actually cause confusion and unexpected late fees if you’re not clear on the vendor’s terms.
What’s the Fix – Always check the vendor’s terms and set reminders 3–5 days ahead of the due date. When in doubt, pay early.
2. Ignoring Payment Terms and Discounts
Mistake: Assuming that they only need to pay within 30 days, many businesses often overlook specific payment terms such as “2/10 Net 30.” However, these payment terms often include early payment discounts.
For example, you can avail of a 2% discount if the payment is made within 10 days. By ignoring these details, businesses miss opportunities to reduce expenses on everyday purchases, such as office supplies.
What’s the Fix: Review the payment terms carefully before setting up your Net 30 Credit Account. Ensure that you understand any early payment discounts and make it a habit to pay early when possible.
3. Failing to Track Spending and Overextending
Mistake: Without a clear system for tracking purchases, businesses might get tempted to make purchases based on what’s available rather than their actual needs. This eventually leads to cash flow disruptions and overutilization of the credit.
What’s the Fix: Use an accounting software or a simple spreadsheet to track all orders made through the Net 30 account. Keep an eye on how much credit you’ve used and ensure you don’t exceed your capacity to pay off your bills by the due date.
4. Not Understanding Credit Limits
Mistake: It is common for new businesses to assume they can place unlimited orders once approved for a business supplies credit account. However, each Net 30 account comes with a defined credit limit.
If you don’t manage your credit, you could easily find yourself maxing out your limit. This can eventually result in declined transactions or even damage to your business credit profile.
What’s the Fix: Monitor your account balance regularly and keep purchases well within the set credit limit. If you need a higher limit, reach out to your vendor and discuss increasing it based on your payment history.
5. Mismanaging Late Payments and Fees
Mistake: Delaying payments, even if it’s only by a day or two, can quickly spiral into a financial headache. Not only do you risk incurring late fees, but you also risk damaging your credit rating, which can impact your ability to secure future financing.
What’s the Fix: Set up automated reminders or schedule payments a few days before the due date. If you do miss a payment, reach out to your vendor immediately to discuss your options.
The Bottom Line
A Net 30 account is a great tool for managing cash flow, building business credit, and acquiring business resources. But it is important to use it wisely.
Have a clear understanding of payment terms, credit limits, and payment deadlines. You can build a strong financial base for your business if you avoid these mistakes and plan on using the Net 30 account strategically.
