What You Need to Know Before Opening a Net-30 Account

  • Register for a DUNS number - This is a unique business identifier you receive when you register at the Dun & Bradstreet credit bureau. This is essential before you can start to build a business credit rating
  • Ask your vendors to report - Not all suppliers will make reports to credit bureaus so it’s always worth asking your vendors to inform the various agencies of your payment history. Dun & Bradstreet request at least four partner vendors before you start to build credit
  • Initial purchases - Some Net 30 vendors will request you make an immediate full or partial payment on your first order so as to build a base level of trust. Keep this in mind if the purchase is expensive
  • Credit inquiries - Bear in mind that some suppliers may run credit searches on both your personal and business score before doing business with you. These will usually be soft pulls, but it’s always worth regularly checking your credit reports for activity to see if any issues are arising
  • Have a business footprint - This includes running a separate business bank account, getting your phone number listed in directory assistance, and establishing an online profile. This helps add legitimacy to your business as well as boost your credit score


Vendor Tradelines vs Financial Tradelines

Net-30 accounts are a type of vendor tradeline, which is a line of credit a business establishes directly with a vendor or supplier. When a company is granted a vendor tradeline, they’re given a specific period of time (typically ranging from 30 to 90 days) to pay off their purchases with account activity reported various credit bureaus.

The term “vendor tradeline” is often confused with “financial tradeline.” A financial tradeline is a record of a business’s or individual’s credit activity with any type of financial institution, such as a bank, credit union, or online lender. Information on financial tradelines is reported to and maintained by credit bureaus to determine how creditworthy a business or individual is.

Though the terminology may sound similar, vendor and financial tradelines are not the same thing. Both vendor tradelines and financial tradelines are types of credit reporting, but they deal with different creditors; vendor tradelines are provided by vendors or suppliers while financial tradelines are available through banks, credit unions, mortgage companies, online lenders, and other financial institutions.


Benefits of Having a Net-30 Account for Small Businesses

Net-30 payment terms offer several notable advantages to small businesses, including:

Building business credit: Paying vendors on time and establishing a history of creditworthiness can help small businesses build a strong business credit profile.

Access to goods and services: Net-30 payment terms can provide small businesses with access to necessary goods and services before they have the cash flow to pay for them outright.

Improved cash flow: Net-30 accounts allow small businesses to delay payment for up to 30 days, which can help improve cash flow and provide more time to pay bills.

Discounts and promotions: Some vendors provide discounts or other promotional offers to customers who pay within the net-30 payment terms.

Simplified bookkeeping: Consolidating purchases through net-30 accounts can help companies simplify their bookkeeping and make it easier to track expenses.


Other Trade Credit Options Available for Small Businesses

In addition to net-30 accounts, there are a number of additional trade credit options available to small businesses. Some of the most common include:

Net-15 Accounts

Net-15 accounts are similar to net-30 accounts, but with a shorter repayment window. Instead of allowing companies 30 days to provide full payment, net-15 payment terms dictate that goods and services must be paid in full within 15 days of purchase. Though this option is less popular than the standard net-30 payment terms and offers limited payment flexibility, it does allow a business to build their credit rating by making consistent on-time payments.  

Net-60 Accounts

A net-60 account is a type of trade credit account where payment is due 60 days after the date of invoice. This means that the buyer has 60 days to pay for the goods or services they purchased. Net-60 accounts are used less frequently than net-30 accounts, but they can be beneficial for businesses that need more time to pay the full balance on their invoices.

Net-90 Accounts

Another potential credit option for businesses is a net-90 vendor tradeline. When a company acquires goods and/or services on net-90 payment terms, they have a full 90 days to pay for their purchase. Though net-90 payment terms are far less common than net-30 accounts, some vendors do offer this option to their most reliable customers. You may need to establish a net-30 account with a supplier and prove your creditworthiness over time before applying for net-90 status.


Net-30 Accounts vs. Loans, Leases, and Credit Cards

Net-30 accounts are similar to loans, leases, and credit cards in that they all involve the extension of credit but that’s where the similarities end. Here’s where these types of credit differ:

Net-30 vs. Loans

  • Loans typically charge interest on the entire borrowed amount while net-30 accounts usually do not charge interest if the balance is paid within the specified time frame.
  • Net-30 accounts require payment in full within 30 days while loans have longer repayment terms with a fixed payment schedule.
  • With a loan, borrowers receive a lump sum of money up front; with net-30, customers receive goods and services, but no cash.

Net-30 vs Leases

  • A lease involves renting equipment or property while a company will own whatever goods it acquires from a vendor using its net-30 account.
  • Net-30 only offers a short-term payment option while a lease can be long-term, often lasting several years.
  • With net-30, businesses simply pay for the goods or services received and retain them indefinitely, while leases often offer purchase or return options at the end of the term.

Net-30 vs Credit Cards

  • Credit cards typically charge high interest rates on borrowed money while net-30 accounts don’t charge any interest or fees if the balance is paid within 30 days.
  • Credit cards can be used to purchase practically any type of goods or services through various vendors while customers can only use net-30 accounts with the specific supplier who offered the credit line.
  • Credit cards typically offer a revolving line of credit with a set limit that requires a minimum monthly payment; net-30 payment terms allow customers to defer payment for goods and services they purchased for up to 30-days. 


Tips for Managing Business Credit in a Responsible Manner

  • Always pay on time - If you miss any payments not only do you risk losing your Net 30 status with that supplier, your business credit could take a significant hit. Remember, months of perfect credit can be undone by just one or two skipped payments
  • Pay ahead of schedule - If you pay your debts well in advance of the due date you’ll be rewarded with a higher credit rating by Dun & Bradstreet. The sooner you pay, the higher your score
  • Negotiate with your suppliers - While the vendors on our list are a good start to cover a lot of business needs, you’ll of course be using a wide range of suppliers. Build a relationship with each one and ask that your repayments be reported. The more vendors that report, the more representative your score will be
  • Stay in touch with your vendors - If it looks like you’re going to struggle to pay an invoice, or issues have arisen in your payments, make sure to let your vendor know. Your suppliers will appreciate you being upfront and it increases the chance of working out an alternate payment plan


Final Word

Opening Net 30 lines of credit with your suppliers is one of the easiest, and fastest, ways to build business credit. Most vendors that operate on these terms will accept businesses that have been operating for just 30 days which makes it an ideal solution for brand new businesses to start building a good score.

Plus, paying on time is a great way to establish a long-term relationship with your suppliers and you may even receive discounts for paying early. Why not take a look at some of the vendors on our list to get started, or even ask some of your local suppliers if Net 30 terms are available?

Vendor Credit FAQ

How do Net-30 Terms Work?

Net 30 terms mean you have 30 days to pay an invoice for goods or services from the date it’s issued. If you pay before, or on, this date the vendor will report positively to credit agencies. If you go over the deadline you’ll get a negative mark and your score could suffer.

Why Do Companies Pay Net 30?

Net 30 helps many vendors expand their customer base. Companies appreciate being given extra time to pay and suppliers can take on more clients as a result. Customers enjoy paying Net 30 terms because it gives them flexibility and has less of an immediate impact on cashflow.

Does Net-30 Days Include Weekends?
Yes. Net 30 terms are always based on 30 consecutive calendar days from the date the invoice is first issued.

About the Authors

Anthony Edmundson

Written by: Anthony Edmundson

Freelance Content Writer

Anthony is a freelance content writer and voice over artist since 2017. Though Anthony specializes in a wide range of topics, it's through running his own company and many years of working in the business lending industry that he can offer the expert advice our readers count on.

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Christi Gorbett

Updated by: Christi Gorbett

Freelance Finance Writer

Freelance Content Marketing Writer specializing in finance, personal development, education, marketing, web development, food & beverage manufacturing, pet, and contracting/home improvement niches.

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Kal Salem

Reviewed by: Kal Salem

CPA, PMP and Finance Consultant

A CPA and finance professional working with small businesses to educate owners and grow alongside their businesses. He holds a Masters in Accounting and a BS in Supply Chain Management. Owner at Salem CPA Services LLC.

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Somer G. Anderson, Ph.D.

Fact checked by: Somer G. Anderson Ph.D., CPA

Accounting and Finance Professor

Somer G. Anderson has been working in the Accounting and Finance industries for over 20 years as a financial statement auditor, a finance manager in a large healthcare organization, and a Finance and Accounting professor at Maryville University.

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