A new company calls the shop on a Wednesday afternoon. They run three buildings over by the Beltway, they've got a maintenance headache nobody's handling, and they want you set up on Net-30 before your truck ever leaves the yard. On the surface, that's a good problem to have.
Here's the catch. You've never done a dollar of work for these folks, and terms mean you float that first job (labor, parts, fuel, the whole ticket) for thirty days on a promise. If they're solid, you've landed an account worth chasing. If they're slow payers or worse, you're calling an AP line every week for the next ninety days, and the cash you fronted is cash you can't put toward payroll or the next parts order.
You don't have to say no, and you don't have to stall the deal for a week while you "think it over" either. A short intake-and-check routine gets you to an answer the same day. You pull a credit application, grab a couple trade references, run a quick business lookup, and you'll know whether to extend terms, ask for a deposit, or start the relationship on a smaller footing.
Know what a bad Net-30 really costs before you hand one out
Terms are a loan. You're the bank, the interest rate is zero, and the borrower set the amount by sizing the job. When owners think about it that way, the vetting stops feeling rude and starts feeling like basic arithmetic.
Run the math on a first job that lands at, say, twelve grand. If it pays in thirty days, fine. If it drags to ninety, you've carried that money for three months, and every week you spend chasing it is a week your office manager isn't booking work. A couple of those in a season and you're borrowing against your own line of credit to cover the gap, paying real interest on somebody else's slow check.
None of this means new accounts are the enemy. It means the size of the first job tells you how hard to look. A four-hundred-dollar service call is a cheap lesson if it goes bad. A build-out worth five figures deserves a real look before you sign off on terms.
Build one intake packet and send it every time
The fix is boring on purpose. The moment someone asks for terms, the same packet goes out, no exceptions and no judgment calls at the counter. A routine you run every time is a routine nobody can talk their way around.
Keep the ask short enough that a serious customer fills it out in ten minutes:
- A one-page credit application. Legal business name, any DBA, physical and billing address, years in business, EIN, and the name and direct line of whoever actually cuts checks in AP.
- Two or three trade references. Other suppliers or contractors who already sell them on terms. A vendor who's been paid by this customer for a year is the best signal you'll get.
- A bank reference. Just the bank name and a contact, so you can confirm the account exists and isn't brand new.
- A signed terms agreement. One page that says what Net-30 means, when late fees start, and that they'll cover collection costs if it comes to that. Nobody reads it until there's trouble, and then it's the only thing that matters.
Ask for a personal guarantee on bigger accounts or brand-new businesses. That's the owner agreeing to stand behind the debt if the company can't. Plenty of small shops sign them without blinking, and a customer who flatly refuses one on a large first order is telling you something.
Do the lookup the same afternoon
References are only half the picture, because the customer picks the references, and nobody lists the vendor they stiffed. A ten-minute lookup fills the gaps the application leaves out.
Here's a sane order to work through:
- Confirm the business is real and registered. The Texas Secretary of State and the Comptroller's site will show whether the entity exists, whether it's in good standing, and how long it's been on file.
- Check that the name on the application matches the registered entity. A mismatch isn't always fraud, but it's always worth a question.
- Call the trade references and actually ask: how long, how much credit, do they pay on time, have they ever gone past due.
- For a large order, pull a paid business credit report. It costs a little, and on a five-figure job it's the cheapest insurance you'll buy that week.
Write down what you find in the customer record, not on a sticky note. Six months from now when they ask to raise their limit, you'll want the history sitting right where you can see it.
A deposit or partial terms is the honest middle
The answer isn't always a clean yes or a flat no. Most of the time the right move sits in between, and offering it keeps the deal alive without making you the bank for a stranger.
A few middle grounds that work:
- Deposit up front, terms on the balance. Half down covers your parts and most of your labor, so the money at risk is smaller if the back end goes slow.
- Start on COD, earn terms later. Run the first two or three jobs on payment at completion. Pay clean, and they roll onto Net-30 with a track record behind them.
- A lower limit to open. Give them terms up to a set amount and revisit once they've paid a few invoices on time.
Say it plainly and it doesn't sting: "We run new accounts on a deposit for the first job, and once we've got a payment history we move everybody to full terms." That's not an insult, it's a policy, and a real customer hears the difference.
Let AI handle the asking and the chasing
This is the part that eats your evening, and it's the part AI handles well. It can take the customer's name and email and draft the whole welcome note, credit application attached, in your shop's voice instead of a stiff form letter. You read it, you send it, done in under a minute.
Follow-up is where it really earns its keep. When a reference hasn't written back, AI can draft a short, polite nudge and remind you three days out so the check never falls through the cracks. Same with the customer who started the application and never finished: a friendly "we just need your two references to turn your account on" keeps the deal moving without you playing collections.
Be clear about where it stops, though. AI drafts and reminds, but it does not decide who's creditworthy, and it can't tell you a reference is honest or a report is current. It won't read a business credit file and make the call for you. Treat it as the dispatcher who keeps the paperwork moving, not the owner who signs off on the risk. The judgment stays yours.
Worth doing this week
You don't need software or a new hire to start. You need one packet and one habit.
- Write a one-page credit application and a one-page terms agreement. Save them where whoever answers the phone can grab them in seconds.
- Set a dollar line. Below it, a deposit's fine. Above it, nobody gets terms until the references clear and the lookup's done.
- Draft three short templates: the welcome-and-apply note, the reference request, and the gentle nudge. Keep them where you can send in one click.
- Pick your two lookup sites (Secretary of State and the Comptroller) and bookmark them so the check is a five-minute job, not a project.
- Next time someone asks for terms, run the routine start to finish once. It'll feel slow the first time and automatic by the third.
Vet the account up front and Net-30 becomes a tool you offer on purpose, not a gamble you backed into. If you'd like help wiring up the templates and the reminders so the whole thing runs itself, that's the kind of plumbing we set up for Houston shops every week.