# Net terms, do you use it



## cornpopps (Jan 8, 2010)

I have a customer who wants to go NET15 with me. Problem is I am a small shop and if they are late it, pending the amount of product they want for the month it can sting quite a bit. I was curious if other use Net terms and what do you do if goes past the date? 
Do you charge a late fee?
Have you had someone just flat out not pay?


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## Fixico (Dec 3, 2011)

I reccommend that you set further terms for the client. Try net15 upto a certain amount. Set this amount to something that won't break you if they don't pay. I also suggest a no new orders with outstanding balance policy, at least until you have more money to use for net term credit capital.
I have had a client ask for net10 and on her first order under those terms she hasn't paid. I set a limit on her terms, so I'm only out about $65.


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## uncletee (Feb 25, 2007)

Always 50% down. net on the balance; if you have to. just my policy, good luck uncletee.


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## Naptime (May 19, 2011)

100% payment up front, in most cases.

returning customers, or larger orders, i will allow 50% down, and 50% on delivery.

the ONLY customers i allow terms with, are recognized organizations. because that's just how they operate, been there...

ie: YWCA, the Mayors Office, Radio & TV stations... they have to generate P.O's and then wait for checks to be cut. 

for those select customers, i allow net 15.

and they can not place new orders, with an outstanding balance.

i am very selective, and careful with my wording and my selections..

as a result i have never been burned. yet.


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## Fenrir (Mar 13, 2012)

I'd be curious as to why they want NET terms. From my experience, from vendor to end user you don't even call it that, you just call it a credit account. NET is from manufacturer to distributor. So it would be NET if she's reselling them, credit if she's using them. To open a credit account where I used to work (concrete floor grinding/polishing equipment and supplies) you had to submit to a credit check as well as get references from at least 1 other supplier, more commonly 3 were asked for. And this was for steady, large volume customers only, usually from giant companies that needed employees to be able to pick up supplies but not actually get their own credit card. Several of them demanded every credit purchase be faxed immediately to the home office.

I can't imagine that the t-shirt orders are more expensive than can be put on a credit card, which would give them a month to pay it off. Asking you to extend the credit is very strange to me.


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## acmeprinting (Jun 4, 2007)

Yeah cornpopps. I can sooo relate. I have net 30 terms and they almost kill me when they're late on payments. I'm a very very small shop as well and I am going back and redoing terms cause its ridiculous how one store with late payments affects me really bad. With that particular store, since he has been late I can now demand him to pay the whole invoice up front for any other merchandise he wants. To me the net30 terms is void from here on out since he is forever late. I have another store who I have had a relationship with for 1 year and a half and they pay me right on time so I'm more inclined to keep them on a net 30. Any new stores I will demand 50% up front.


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## Ribcage (Nov 4, 2010)

I do 50% down, 50% upon completion. When I print for a larger company or organization that only pay in 30 days, I offer a prepay discount of 5% and most have gone for it. 

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## Preston (Mar 21, 2006)

What they are asking with the net 15 thing is for you to finance them. I always tell customers who ask for net terms that "The banks do not print shirts and I do not offer financing". If they need 15 days to pay the bill then they can pay their credit card company in 15 days.

We are 100% upfront for all retail custom work and COD on all contract printing where we do not provide the shirts.


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## binki (Jul 16, 2006)

anything under $200 is 100% up front, all others are 50% down and 50% on pickup. No credit.


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## Riph (Jan 11, 2011)

I have customers that get 60 days to pay from my competitors. A large part of the shirt/cap buying businesses here are seasonal businesses - they order in the winter, they take delivery in May, they pay in July. It's the way it is, and the big suppliers know it. They have the volume and cost structure to carry the debt, and price it into their product.

I on the other hand, am local and small. I have to do something to compete, so I offer payment terms. (I think I outperform the big guys, too, but that's just my opinion, I could be wrong). 30 days is typical. No one has screwed me yet, maybe because it is a small town. They know I am the little guy, and they figure out how to make it work. They choose to buy from me because they live here too, and they know that we need to support the local economy as much as possible. If they buy from me, I'll carry them until they get the money to pay. I can't do it for everyone, but I can do it for strategic accounts.

I would love to have enough customers to dictate payment terms all the time, but to do business with the biggest summer businesses, this is what I must do. Not for every order, but for probably 40-50% of my volume.

Everyone has different customers, different situations. If I lived in LA, trust me, it would be different.  

I try not to have more than $5,000 out on net 30 terms, and so far, it has worked. TBH, you get almost nothing on that money if it's invested, so, might as well use it to get more orders.


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## treefox2118 (Sep 23, 2010)

NET terms are done with all large corporations. Of course, we charge all large corporations 2-300% higher prices than we do walk-ins or small business customers.

If they're big, I will swing them NET30 or even NET60, but I get a massive profit influx when they pay.

If you can't afford to float the credit, don't risk it. I've seen some of my best competitors go out of business over a handful of late or no payers, and that's never good for anyone's business.


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## latitude42 (Sep 26, 2007)

NO NET!!!
I tell them if they need 30 days, they can pay with their credit card and the card company will give them the 30 days.
I use "Square" to process my credit cards, no monthly fee or contract.. very simple and portable. 
Latitude42


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## cornpopps (Jan 8, 2010)

Fenrir said:


> I'd be curious as to why they want NET terms. From my experience, from vendor to end user you don't even call it that, you just call it a credit account. NET is from manufacturer to distributor. So it would be NET if she's reselling them, credit if she's using them. To open a credit account where I used to work (concrete floor grinding/polishing equipment and supplies) you had to submit to a credit check as well as get references from at least 1 other supplier, more commonly 3 were asked for. And this was for steady, large volume customers only, usually from giant companies that needed employees to be able to pick up supplies but not actually get their own credit card. Several of them demanded every credit purchase be faxed immediately to the home office.
> 
> I can't imagine that the t-shirt orders are more expensive than can be put on a credit card, which would give them a month to pay it off. Asking you to extend the credit is very strange to me.


The company that asked for NET terms is for a promotions company that has clients that purchase custom products(shirts, caps ect) and they outsource all the work and then resell them to the clients at a markup. The promotions company's clients ask for Net terms and so my customer asked for NET terms. Since I am a small business I am not going to accept the terms as if this client comes with a late payment it will hurt too much. Thanks for all the responses. It has really helped.


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## cookiesa (Feb 27, 2008)

In that situation you could also be helping a business that is possibly competing with you on some quotes.

Flip side, their is the potential for you to reach customers who may not automatically come or look for you.

It's a fine line at times, wholesale customers are good, but retail are best  where do you want to focus your business?


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## SunEmbroidery (Oct 18, 2007)

I would think that 15 days wouldn't make too much difference for a solid business for most T-shirt orders. If it does then you probably shouldn't be giving them any terms because their finances aren't on solid ground. 

I receive payment in full before starting with a few exceptions. All internet orders (99% of business) are 100% payment to start except for established universitiies. Some long-time local customers pay in full when the order is complete. I have terms with one local customer. They always pay but they are almost always 1 1/2 -3 months late. When that happens I spend extra time getting after them about payment. After that started I decided to not offer terms to anyone else. I've also received a bad check (account closed and left the state) and someone claim payment was lost in the mail and expect me to take the loss. 

I would definitely collect enough to cover yourself so you don't worry about what if... A lot of people thikn if you are in business that you have plenty of money and therefore can take an occasional loss - NOT TRUE! Most people in this business work hard for not much and deserve to be paid. If you decide to offer terms make sure its in writing and don't base anything on the promise of future orders.


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## Sport T (Nov 10, 2010)

Question for those of you that do not offer terms to your customers. Do you get terms from your suppliers or do you pay cash for everything?


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## SunEmbroidery (Oct 18, 2007)

By "cash" are you including credit cards or just COD if you can't use local pickup?


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## royster13 (Aug 14, 2007)

I have been at this a long time and can generally get whatever terms I need....Having said that, I usually get the best prices by paying 100% up front or when orders are ready to ship.....

As far as terms you offer, they will depend on what you can afford and how bad you need the business.....Remember any sale is a meeting of the minds.....If your client does not like your terms, they may go elsewhere...So if you need the business, you may need to adapt...


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## jamerican352005 (Nov 1, 2008)

With technology I believe NET terms should be a thing of the past. Just like several other members have stated, I would question why they are asking for NET terms. In my experience most of those customers will leave you high and dry. When my father owned the company he allowed 60% of the customers to be on NET terms. After eating a couple of jobs while I was there I told him he should try credit cards only. If the customer doesn't have a credit card offer COD (money order). I can tell you we most certainly saw an increase in our bottom line when we started accepting credit cards. Sure you have to pay merchant fees but I would rather pay those fees than loose $500.00+ on a job. I would tell them you talked to their credit card company and they said you would get 30 days to pay them


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## martinwoods (Jul 20, 2006)

Sport T said:


> Question for those of you that do not offer terms to your customers. Do you get terms from your suppliers or do you pay cash for everything?


 
always pay up front before my suppllies ship and we ask the same from our customers.


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## SunEmbroidery (Oct 18, 2007)

Bre - I like your last statement! 

If someone is really looking for terms and you're okay with risking it you might dissuade them by offering a discount for cash while actually charging more for terms. If they complain you could add that you have to charge more for terms to cover additional bookkeeping.


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