Net-30 terms — letting a customer pay 30 days after delivery — can win you bigger, more committed buyers who expect credit. They can also turn into interest-free loans to customers who pay late or not at all. Offering terms isn't the risk; offering them without a process is. Here's how to extend credit without getting burned.
Vet before you extend credit
Terms are credit, and credit goes to those who've earned it. Before offering net-30, do basic due diligence: how established is the business, do they have references or a payment history with you, are there obvious red flags? New, unproven customers can start on prepayment or a deposit and earn terms over time. You don't have to extend credit to everyone who asks — and you shouldn't.
Set credit limits
Even for approved customers, cap your exposure with a credit limit — a maximum outstanding balance you'll carry for them. This protects you if a normally reliable customer hits trouble; you're never owed more than you decided you could afford to lose. Raise limits as customers prove themselves, but always have a ceiling rather than open-ended exposure.
Invoice immediately and track aging
The net-30 clock starts when you invoice, so invoicing late just delays your own payment — net-30 becomes net-40 because you sat on the bill. Send the invoice the day you deliver. Then track aging: know which invoices are approaching due and which are overdue, so nothing slips. A customer who's quietly 45 days late on a 30-day term is a problem you want to catch early, not discover by accident.
Have a clear process for late payers
Decide in advance what happens when a payment is late: a reminder at due, a firmer follow-up after, a hold on new orders past a certain point. Consistency matters — customers learn how seriously you take your terms. A clear, calm escalation process collects more than ad-hoc nagging and protects the relationship better than letting resentment build.
Vet customers, cap exposure with limits, invoice immediately, track aging, and handle lateness consistently. Do that and net-30 becomes a tool for winning good customers instead of a way to lend money you never get back.