Working capital
Net-30 terms from a supplier are a loan you rarely think of as one. Used well, they fund inventory for free. Used badly, a missed discount can cost more than outside funding.
✓ Checking what you qualify for does not affect your credit score.
Updated October 13, 2026 · Merchant Fund Express
Trade credit is when a supplier ships now and lets you pay later, usually on terms like net 30. Vendor financing is a broader version where a seller of equipment or goods finances the purchase over time. Both can cost nothing if you pay on time, but many terms include an early-payment discount, and passing on it has a real cost.
The test is simple: compare the price of skipping the discount with the price of outside funding for the same days. Whichever is cheaper wins.
| Term | Meaning | What it costs to wait |
|---|---|---|
| Net 30 | Pay the full invoice within 30 days | No discount; free if paid on time |
| 2/10 net 30 | 2% off if paid within 10 days, full price by day 30 | Skipping the discount costs 2% for 20 extra days |
| 1/15 net 45 | 1% off if paid within 15 days, full price by day 45 | Skipping costs 1% for 30 extra days |
| Vendor equipment financing | The seller finances equipment over months or years | Compare its total cost with equipment financing |
A restaurant supply distributor buys $120,000 of inventory a month from a vendor offering 2/10 net 30.
| Item | Figure |
|---|---|
| Monthly purchases | $120,000 |
| Discount for paying by day 10 (2%) | $2,400 a month |
| Extra days of credit if you skip it | 20 days |
| Skipping the discount over a year | about $28,800 |
Two percent for 20 days is roughly 36% on an annualized basis, which is expensive money. If a line of credit from 1% per month were drawn for the 20 days to pay early, the draw cost would be about $800 on $120,000, against a $2,400 discount, leaving about $1,600 a month ahead. Over a year that is close to $19,000.
That math only works if the draw is repaid on day 30 from the sales the inventory produces. If it is not, the advantage disappears.
All figures in worked examples are illustrations of the arithmetic, not offers or quotes. Real terms depend on your file and the funder.
A business line of credit pairs best with trade credit because you draw only for the days you need and repay as receivables clear. Tier 1 lines need 3+ years in business, a 650+ FICO and $25,000 a month in revenue, and a line can sit in second position.
For businesses that do not yet clear Tier 1, working capital or revenue-based funding can cover a large supplier order or a seasonal stock-up. For equipment a vendor offers to finance, compare its schedule with equipment financing on total repayment.
Supplier terms run out when an order is larger than your credit limit, when a new supplier requires payment up front, or when a seasonal buy has to be paid long before the season's sales arrive. In those cases a short, sized facility is usually cheaper than losing the order. Check your fit with the qualification check, which does not affect your credit.
Functionally, yes: you receive goods now and pay later. It is usually interest-free if paid on time.
Only if the cost of borrowing for those days is lower than the discount and you can repay from the sales the goods produce. The worked example shows how to check.
It can, if the supplier reports payments to a business credit bureau. Ask them.
Normal trade payables are part of operating the business. Past-due balances, payment plans and vendor equipment financing should be disclosed. Start at the application.
Same-day decision. Applying takes a few minutes and will not affect your credit score.
