Not all businesses qualify for the Net 30 business applications, some will, therefore, best function with either Net 10 or Net 14; Net 30 however, seems to work best for big enterprises, as they can be able to service their clients as they wait for approval from the various management levels. Small businesses, on the other hand, benefit from net 30 because they rarely have a lot of cash to give to wholesalers.
Reasons why your business needs Net 30
Another advantage of using Net 30 for the growing businesses is that no interest will be required, but there is also the diminishing window of time that entrepreneurs have to work within. Net 30 accounts, therefore, give you the perfect opportunity to satisfy your large customer base without necessarily using cash, a good example to get your started would be the useful crown Net 30 applications.
- Entrepreneurs get a better competitive edge- for your business to remain viable you have to stay ahead of the competition and this means providing for and maintaining your clients. You, therefore, stand to lose loyal customers if you cannot agree on credit terms, not all clients qualify for credits but those that do should be able to get it or risk losing them to your competitors who are extending credit terms.
- Net 30 attracts more clients- Net 30 means a booming business; look at it like this, businesses require a constant injection of cash for viability, a thing that is rarely possible with the small scale businesses, known to experience cash flow problems. But if you can come up with a 30-day payment plan then the small businesses that depend on you will be able to stand on their own and with the good word spreading around you stand to build a large customer base.
- An early payment discount will attract an early payment from your clients – Net 30 is the agreement by which your clients need to stick to but it is totally flexible allowing them to pay only earlier if they can and get a discount of your choosing. So, to make Net 30 work perfectly by motivating your clients to pay quicker all you have to do is offer an interesting discount, for example you could give them a 2% discount if they manage to settle their pending debt in 20 days.
- Builds a long term relationship with your customers- entrepreneurs are dedicated hardworking individuals who will develop an attachment where they feel appreciated. What the above means for you is that you will get a long term loyal customer with a relationship whose base is trust, what is then created from this union is a symbiotic business relationship that is beneficial to both you and your client.
Will your business thrive or succumb to Net 30
With all the good that comes with Net 30, we would be lying if we said that there isn’t a lean side to this lucrative payment plan. So before you take the Net 30 route, check on your profit margins, if it is thin then this might not be a very good option for you, because with Net 30 the profit margin becomes even leaner.
There are however, two ways to look at this, if you are supplying consumer goods to many retailers and are using the Net 30 plan, you get to be paid quicker and the cumulative profit from all your clients is better than insisting for payment upfront when the small businesses are struggling. And then there is the option of reducing the profit margin but have your clients pay you quicker, this kind of system prevents instances of dead stock.
Net 30 is labor-intensive-
once you have given out goods and are expecting payments later, there is always that feeling of uneasiness whether all the clients will come through or not. Now for clients who have forfeited the terms of your agreement by delaying payments, you will have to make follow-ups, there is also the extra job of handling a large amount of money coming in at a go.
And since you want your clients to pay up on time or earlier, you will have to come up with brilliant ways to encourage them to pay their debts such as coming up with discounts that will not eat into your profit.