If you run a wholesale or distribution business in the Philippines, buyers regularly ask for time to pay. A new reseller wants to stock your products but settle the invoice 30 days after delivery. Say no, and they may buy from the supplier down the road. Say yes, and you could end up chasing payments for months.
This guide is for wholesalers and distributors deciding whether to offer Net 30 credit terms. You'll learn what credit terms mean in plain words, the pros and cons for Philippine businesses, real-world use cases, and how to protect your cash flow if you say yes.
What are credit terms and Net 30?
Imagine you sell sacks of rice to a convenience store. Normally, the store owner pays you cash when you deliver.
With credit terms, you say: "Take the candies now. Pay me later."
Net 30 sets the deadline for "later." The buyer must pay the full amount within 30 days from the date on your invoice. "Net" means the total, with no discount.
That's it. Credit terms are a short, interest-free loan from you to your customer, paid back after they've had time to sell your goods.
Common credit term formats
In the Philippines, many suppliers simply call this "terms." A buyer asking for "30 days terms" is asking for Net 30.
Why Philippine buyers ask for credit terms
It may happen if most of your buyers are small businesses: sari-sari stores, carinderias, hardware stores, resellers, and online sellers. Many run on thin margins and tight cash. They need to sell your goods first before they have money to pay you.
Bigger buyers ask for terms too. Supermarkets, restaurant chains, and corporate clients often have fixed payment cycles, such as paying suppliers every 15th and 30th. For them, terms are standard. Some will only work with suppliers who offer them.
Pros and cons of offering credit terms in the Philippines
The pros
1. You win more buyers: Many Filipino SMEs can't pay upfront for bulk orders. Offering terms opens the door to customers who would otherwise buy smaller amounts, or buy elsewhere.
2. Buyers order more: When a store doesn't have to pay today, it's easier to say yes to a full case instead of half a case.
3. You compete with bigger distributors: Large distributors offer terms as a matter of course. Matching them keeps you in the running for supermarket, restaurant and corporate accounts.
4. You build loyalty: Trust matters in Philippine business. A buyer you helped with terms during a slow month is more likely to stay loyal for years.
The cons
1. Your cash is stuck for 30 days or more: You still pay your own suppliers, rent, salaries and delivery costs on time. If your buyers pay in 30 days, you carry that gap.
2. "30 days" often becomes 45 or 60: Late payment is common. Buyers may wait for their own customers to pay them first, and the delay passes down the chain.
3. Collecting takes time and effort: Someone has to send reminders, follow up by text or Viber, and sometimes visit in person. That's time not spent selling.
4. Some buyers never pay: Stores close. Owners disappear. Checks bounce. Every unpaid invoice is lost product and lost profit.
5. Paper checks slow everything down: PDCs need to be deposited and cleared before you can use the money, and a bounced check means starting collection over.
Use cases: when credit terms make sense (and when they don't)
These examples are illustrative. Use them to test your own situation.
Use case 1: The beverage distributor and the sari-sari store network
A beverage distributor in Laguna supplies 200 sari-sari stores. Most stores can't afford a full delivery upfront, so the distributor offers Net 7 or Net 15 to stores with six months of good payment history. New stores pay COD.
Why it works: short terms, small amounts per store, and terms earned through a track record. If one store doesn't pay, the loss is small.
Use case 2: The food supplier landing a restaurant chain
A meat and poultry supplier in Pampanga wants to supply a restaurant group with eight branches. The group pays all suppliers on Net 30. COD is not an option.
Why it works: the account is large and steady, and the buyer is an established company. The supplier asks for business documents, sets a credit limit, and sends invoices the same day as delivery so the 30-day clock starts on time.
Use case 3: The hardware wholesaler and the contractor who stopped paying
A hardware wholesaler in Cebu gave a new contractor Net 60 on a large order of cement and steel. The project stalled. The contractor paid late, then stopped paying.
What went wrong: long terms, a large order, a new customer, and no credit limit or deposit. Any one of these is manageable. All four together created a large bad debt.
Use case 4: The online seller supplying resellers
A cosmetics brand sells wholesale to 150 online resellers across Luzon and Mindanao. Instead of terms, it offers a small discount for upfront payment through payment links, and Net 15 only to top resellers.
Why it works: most resellers pay right away to get the discount. Terms go only to proven partners.
Risks of credit terms and how to reduce them
Five rules to protect your business
- Start every buyer on COD or a deposit. Offer terms after they've shown they pay on time.
- Net 7 or Net 15 before Net 30. Only offer Net 60 to large, established accounts.
- Decide the maximum each buyer can owe you at one time.
- A simple credit agreement should state the term, the credit limit, and what happens when payment is late.
- A 1–2% discount for paying within 10 days can speed up your cash more than any reminder.
If a buyer refuses to pay a clear debt, small claims court is an option for amounts up to PHP 1,000,000, excluding interest and costs, under the Supreme Court's Rules on Expedited Procedures in the First Level Courts. You don't need a lawyer; in fact, lawyers can't represent parties at the hearing. Prevention is still far cheaper than collection.
Make credit terms easier to manage with PayMongo
Offering terms is a business decision. Getting paid on time is a process, and that process is where most suppliers lose time and money.
With PayMongo, you can:
- Send digital invoices the moment goods are delivered, so the 30-day clock starts right away.
- Share a payment link by Viber, Messenger, SMS or email. Buyers pay with GCash, Maya, cards or online banking in a few taps, with no check to deposit.
- Automate your billing so you don't have to chase payments.
- See who has paid in one dashboard, instead of matching deposits against a notebook.
When paying is easy, buyers pay sooner, and you spend less time chasing.
Create a free PayMongo account and start sending invoices your buyers can pay online.
Frequently asked questions
What does Net 30 mean?
Net 30 means the buyer must pay the full invoice amount within 30 days of the invoice date. "Net" refers to the total amount due, with no discount applied.
Is Net 30 common in the Philippines?
Yes. Net 30 is common in B2B trade, especially with supermarkets, restaurant chains and corporate buyers. Smaller buyers like sari-sari stores often get shorter terms, such as 7 or 15 days.
What is the difference between Net 30 and 2/10 Net 30?
You can, if the interest is agreed in writing, for example in a credit agreement or on the invoice terms. Without a stated rate, courts generally apply the legal interest rate.
How do I get customers to pay invoices on time?
Send invoices on the day of delivery, remind buyers before the due date, offer a small early-payment discount, and let them pay online through a payment link instead of by check.
