The Real Math Behind Net-30, Net-60, and Net-90 Jobs

You can win the bid, finish the work, and still run out of cash. That is the trap of net payment terms. Net-30 means you wait 30 days after invoicing to get paid. Net-60 and Net-90 stretch that to two or three months, and during that time you are funding the job out of your own pocket.

Here is the math that decides whether your business survives the wait, and what to do about it.

What net terms actually cost you

Imagine a 30,000 dollar job with 20,000 in material and labor cost. You pay your crew and your supplier now. On Net-60 terms you do not see the 30,000 for two months. For those two months you are out 20,000 in real cash you already spent.

Now run three of those jobs at once. You are carrying 60,000 dollars in costs you have paid but not been paid back for. If you do not have that cash sitting in the bank, you cannot take the next job, even though every job is profitable.

Why profitable contractors still go broke

Profit is not cash. Profit is what is left after a job is fully paid for. Cash is what is in your account today. A growing contractor on long net terms can show a healthy profit on paper and still bounce payroll, because the money is tied up in work that has not been paid yet.

How to protect your working capital

• Get a deposit up front on every job you can
• Bill progress payments on long jobs instead of waiting for the end
• Know your cash runway before you take a second or third net-term job
• Charge slightly more for long net terms to cover the cost of carrying the money
• Send invoices the day the work is done, not the end of the month

Deposits and progress billing change everything

A deposit and progress payments keep cash flowing in while the job is still going, instead of all at the end. That single change is the difference between a contractor who can take on more work and one who is always one slow payer away from trouble. Make it easy for the customer to pay, and pair every estimate with clear payment terms so there are no surprises.

Key Takeaways

• Net terms mean you fund the job until you get paid
• Profit on paper does not pay your crew, cash does
• Deposits and progress payments keep you solvent
• Price in the cost of carrying long net terms

What does Net-30 mean for a contractor?

It means payment is due 30 days after you invoice. You cover all job costs in the meantime, so you need enough cash on hand to wait.

Should I take Net-90 jobs?

Only if you have the working capital to carry the costs for three months, or you collect a deposit and progress payments that keep cash coming in.

How do I get customers to pay faster?

Invoice the day work is done, offer an easy way to pay, ask for a deposit, and bill progress payments on longer jobs.