Offering net terms to restaurant customers without losing your shirt

Every net-30 invoice is a loan. You bought the product, packed it, and drove it across town, and you agreed to wait a month to be paid for it. Do that across a hundred restaurant accounts and you are running a small lending operation on the side of your distribution business — whether or not you ever decided to.

That's not an argument against terms. Net 30 and net 60 are how you win serious restaurant accounts; a chef running a busy kitchen isn't going to prepay every produce order, and a competitor who offers terms will take the account if you won't. The argument is for offering terms deliberately, with the guardrails that keep a portfolio of open invoices from quietly draining your cash. This is a companion to our B2B ordering guide — here we go deep on just the terms decision.

When to extend terms at all

Not every account should be on terms, and the time to decide is before the first delivery — at account approval, not after a problem shows up.

Good candidates for net terms: established restaurants with a track record, references you can actually call, and a resale certificate that checks out. Accounts with steady weekly volume where terms are the cost of keeping the business.

Keep on prepaid, at least to start: brand-new accounts with no history, seasonal or pop-up operations, anyone whose references are vague, and any account that has already paid you late. Prepaid isn't a punishment — it's how a relationship earns its way to terms. A new customer who prepays cleanly for a few months has shown you exactly what you needed to know before you start carrying them.

The mistake is treating terms as the default and prepaid as the exception. Flip it: prepaid is the starting position, and terms are something an account qualifies for.

Sizing the credit limit

Once you extend terms, the credit limit is the single most important number on the account. It's the ceiling on what a customer can owe you at any one moment — which means it's also the cap on what you lose if they close their doors overnight, and restaurants do exactly that.

A workable way to size it: base the limit on the account's realistic order volume over one payment cycle, not on optimism about where the relationship might go. If a restaurant orders about $1,500 a week and you're offering net 30, they'll have roughly four weeks of orders open before the first invoice comes due — so a limit needs to cover that real exposure, and no more than you'd be willing to lose. Start conservative. It is far easier to raise a limit for a customer who's paying like clockwork than to claw one back from a customer who's already over it.

Then revisit limits as the relationship earns it. A customer who's paid thirty invoices on time has proven something; a customer who's twice needed a nudge has proven something else.

The limit only works if it's enforced at order time

Here's where most manual systems fail, and it's worth being blunt about it. A credit limit written on a customer's account record does nothing if nobody checks it when the next order comes in.

The classic sequence: a customer is already carrying a big open balance, they place another order, an order-taker who doesn't have the balance in front of them keys it in, a driver delivers it the next morning, and now you're deeper into an account that wasn't paying the first invoice. Nobody made a bad decision — the information just wasn't where the decision was being made.

Software fixes this by moving the check to the moment of the order. When a new order would push a customer past their credit limit, the system should stop it and flag it for you to review — not wave it through and surprise you on invoice day. In Minori Midori, the credit limit is enforced automatically at order time: an order that would breach the limit doesn't just quietly go out the door. That single mechanic — the limit biting when the order is placed rather than when the invoice is cut — is most of what protects you.

Order minimums ride along on the same logic. A minimum order amount keeps every delivery worth the truck roll, and enforced online it nudges the customer to add another case rather than forcing you into an awkward call.

Invoicing and the overdue clock

The moment you deliver on terms, an invoice is born and a clock starts. Net 30 means that clock runs 30 days; net 60, sixty. The distributors who get paid reliably are the ones who treat that clock as a real thing to be tracked, not a rough sense of who "usually" pays late.

The manual version is a spreadsheet of open invoices that somebody scans once a week and eyeballs for anything that looks old. It works until the week it gets skipped, and then a 60-day invoice quietly becomes a 90-day problem. The reliable version is a system that knows every invoice's due date and surfaces overdue balances automatically, so following up is a matter of working a list the software hands you rather than remembering to build it.

Automatic overdue tracking does something subtler too: it makes collections routine instead of confrontational. When a friendly reminder goes out the day an invoice tips overdue, it reads as a process, not an accusation — and most late payments are honest oversight in a busy kitchen, not refusal. The invoices that stay unpaid after a couple of nudges are the ones that tell you to move that account back to prepaid before the hole gets deeper.

Protecting cash flow

Terms are a cash-flow decision as much as a sales decision, and the whole portfolio matters, not just any one account. A few principles keep it healthy:

• Stagger your exposure. If every big account is on net 60, you're financing two months of product at all times. Reserve the longest terms for the accounts that have truly earned them.
• Watch the aging, not just the total. A rising balance of current invoices is growth; a rising balance of overdue ones is a warning. Automatic tracking is what lets you tell those apart at a glance.
• Tie the limit to behavior. Paying on time buys a higher limit and longer terms; paying late costs them. When customers understand that, terms become an incentive that works in your favor.
• Don't let a good relationship override the guardrails. The account you trust most is exactly the one you'll be tempted to keep serving past its limit "just this once." The system enforcing the limit protects you from your own goodwill.

Terms, run like a lender

Offer terms because they win business, but offer them like a lender, not a giveaway. Start new accounts on prepaid and let them earn terms. Size credit limits to real exposure and keep them conservative. Insist that the limit is enforced when the order is placed, not discovered when the invoice ages. Track every invoice against its due date so overdue balances surface on their own. Do that, and net terms become a tool for growing your best accounts instead of a slow leak in your cash.

Approvals, per-customer pricing, and the rest of the wholesale order flow are covered in the B2B ordering guide.