Net 30 is a cash-flow decision

A customer offers you a $12,000 job. The price works. The work is worth taking. Then the payment terms arrive: net 30.

Now you have a second decision. Can you pay for the job and keep the rest of your business running while you wait to collect?

A profitable order can still put you short of cash.

The $7,000 gap

Say the job requires:

• $4,500 in materials
• $1,500 in labor or subcontractors
• $1,000 in freight, fees, and other direct costs

That is $7,000 paid before the customer pays you. The $12,000 sale leaves $5,000 to cover overhead, taxes, any financing cost, and profit. It may be a good job. You still need the cash to carry it.

The timing starts before the invoice is paid. If you buy materials before delivery and invoice when the work is complete, you may carry the cost for longer than 30 days. Confirm exactly when the payment clock starts under the agreed terms, then plan around the date you realistically expect the money to reach your account.

One open job may be manageable. Four similar jobs can tie up $28,000 before you collect a dollar from them.

Check five numbers before you say yes

1. Cash required before collection. Include materials, payroll, subcontractors, freight, and any other payment caused by the order. Subtract a deposit or other payment you will actually receive first.
2. Dates cash leaves. A bill due three weeks from now is different from payroll due Friday.
3. Realistic collection date. Show the due date and a late-payment case. A due date is not cash in the bank.
4. Protected reserve. Decide how much must remain available for the rest of the business.
5. Total open exposure. Add up the cash tied up in every unfinished or unpaid job, not just this sale.

Here is a quick test: if you have $18,000 in available cash and need to protect $12,000, you have $6,000 above your reserve. A job requiring $7,000 before collection crosses that floor by $1,000. The bank balance would still be positive, but you would have spent cash you meant to protect.

Try to shrink the gap

Before financing the full amount yourself, see whether the terms can change:

• Ask for a deposit that covers materials or other costs you cannot recover
• Bill at clear milestones instead of waiting until the entire job is done
• Negotiate supplier terms that better match the customer's payment date
• Set a smaller limit for a new customer until you know how reliably they pay
• Invoice promptly and make the due date and follow-up process clear
• Price extended terms to account for the cost and risk of carrying the work
• Set a point where new work pauses if an invoice becomes overdue

A large customer may refuse some of these terms. That is useful information for the decision. The cash gap still exists; now you know how much of it you must fund.

Know what financing would solve

A line of credit may help with a temporary timing gap if the job still works after financing costs and you can handle a late payment. Compare the full cost and repayment schedule with the cash you expect to collect. Check fees, collateral, and any personal guarantee as well.

Borrowing does not repair a price that is too low or a customer who repeatedly pays beyond the agreed terms. If the order needs perfect timing to keep your business above its reserve, negotiate the work before you commit to it.

Run the late-payment case

Make a short cash schedule first. For each of the next several weeks, start with available cash, add payments you reasonably expect to collect, subtract payments that must go out, and compare the ending balance with your protected reserve. Move the customer's payment later and run it again.

Then use the Cash Runway calculator to see how the order affects your broader monthly cash picture. It lets you enter a protected reserve and known one-time cash events. Count this job's costs and customer payment only once; do not add them as one-time events if they are already included in your typical monthly receipts and outflows.

The calculator applies those events at month end. If a customer pays 15 days late within the same month, that change may not show up in its result. Your weekly schedule is the check for a tight payroll date or a short gap inside a month.

A large sale is worth taking when the margin, payment terms, and cash exposure work together. Run the normal case and the late-payment case before you commit.

This guide is educational planning information, not accounting, legal, tax, or lending advice. Check the terms that apply to your contract and business.

Further reading: SBA guidance on net-30 terms and cash flow