# What's the actual cash-flow tradeoff of offering Net 60 terms to a large wholesale account vs requiring payment upfront?

Reviewed by Martin Dejnicki, Director of SEO & AI Search · facts verified October 9, 2026 · canonical: https://deploi.ca/shopify/faq/net-60-terms-vs-upfront-payment-cash-flow

## Short answer

Net 60 costs about 1.15% of order value in financed working capital against payment up front, at the US bank prime rate of 7.00% ([Federal Reserve H.15](https://www.federalreserve.gov/releases/h15/), October 2026; Deploi arithmetic). That interest is the floor, not the total, so add late payment, bad debt and collections labor, then price the terms into the wholesale margin rather than absorbing them.

- **Net 60 at the prime rate:** About 1.15% of order value. Order value times the 7.00% bank prime rate times 60 over 365 days (Deploi arithmetic from the Federal Reserve's H.15 release of 8 October 2026). ([Federal Reserve, H.15 Selected Interest Rates (Daily)](https://www.federalreserve.gov/releases/h15/))
- **Net 30 against Net 60:** 0.58% against 1.15%. Halving the term halves the carrying cost at the same 7.00% prime rate (Deploi arithmetic from the figures above). ([Federal Reserve, H.15 Selected Interest Rates (Daily)](https://www.federalreserve.gov/releases/h15/))
- **Net 60 on a prime-plus-2 credit line:** About 1.48% of order value. At a 9.00% borrowing rate, two points over the October 2026 prime rate (Deploi arithmetic from the figures above). ([Federal Reserve, H.15 Selected Interest Rates (Daily)](https://www.federalreserve.gov/releases/h15/))
- **Shopify's collection help:** Reminders up to 30 days past due. Up to five reminder emails from the due date to 30 days after; Shopify doesn't capture payment automatically when terms expire (October 2026). ([Shopify Help Center, Managing orders with deferred payments](https://help.shopify.com/en/manual/fulfillment/managing-orders/payments/deferred-payments); [Shopify Help Center, Setting up payment terms in B2B](https://help.shopify.com/en/manual/b2b/checkout-and-orders/payment-terms))

## Deploi's call

The interest cost of Net 60 is small and the operational cost is not. A merchant who can enforce a limit and see an aging report can run Net 60 profitably. A merchant who can do neither is buying revenue with an unpriced option, and the option gets exercised in the quarter it hurts most.

**CUSTOMIZE: Carry Net 60 on your own book when**

- The account has paid cleanly on its first orders, and the volume the terms win is real.
- Contribution margin on that volume clears 1.15% plus your bad-debt rate, because 1.15% is the carrying cost at the October 2026 prime rate ([Federal Reserve H.15](https://www.federalreserve.gov/releases/h15/); Deploi arithmetic).
- You can see aging by account and stop an over-limit order, which [our credit limits record](https://deploi.ca/shopify/build-vs-buy/b2b-credit-limit-and-order-hold-management) scores BUILD on Shopify (October 2026).

**BUY: Finance the term instead when**

- Late payment by a few big accounts would strain your cash, which [our net terms record](https://deploi.ca/shopify/build-vs-buy/net-terms-and-b2b-payments) scores BUY for a financing provider (October 2026).
- You would rather not carry the account's credit risk at all: [a trade-credit provider such as Resolve replaces native terms](https://deploi.ca/shopify/faq/shopify-b2b-trade-credit-invoice-financing) on that company location.

## How much does Net 60 cost in financed working capital?

Net 60 costs about 1.15% of order value in financed working capital at the US bank prime rate of 7.00%. That is the rate the Federal Reserve's H.15 release shows for every business day from 1 to 7 October 2026 ([Federal Reserve H.15](https://www.federalreserve.gov/releases/h15/), October 2026). The carrying cost of a term is order value times your cost of capital times days over 365. On Shopify the wait can run past day 60, because [Shopify's net terms run from invoice to payment](https://deploi.ca/shopify/faq/b2b-net-terms-invoice-to-payment-flow) without capturing anything at the due date.

**Each 30 days of terms costs about 0.58% of order value at a 7.00% prime rate (Deploi arithmetic)**

| Term | Days | Carrying cost at 7.00% prime |
| --- | --- | --- |
| Payment up front | 0 | 0% |
| Net 30 | 30 | 0.58% |
| Net 45 | 45 | 0.86% |
| Net 60 | 60 | 1.15% |
| Net 90 | 90 | 1.73% |

Sources: [Federal Reserve, H.15 Selected Interest Rates (Daily)](https://www.federalreserve.gov/releases/h15/). Verified October 9, 2026.

So a $500,000-a-year account paid on Net 60 costs about $5,750 a year to finance (Deploi arithmetic).

## Which cost of capital should the Net 60 arithmetic use?

The Net 60 arithmetic should use your own marginal cost of capital, not prime, because prime is a reference rate. The Federal Reserve describes prime as "one of several base rates used by banks to price short-term business loans" ([Federal Reserve H.15](https://www.federalreserve.gov/releases/h15/), October 2026). If you borrow on a revolving credit line at prime plus 2, use 9.00%, which puts Net 60 at about 1.48% of order value (Deploi arithmetic). If you fund terms from retained cash you would otherwise put into inventory or paid media, use the return on that alternative. In our judgment that return sits well above prime for a growing merchant, so it is the honest number to use.

## What does Net 60 cost beyond the interest?

Net 60 costs three things beyond the interest: slippage, bad debt and collections labor.

1. **Slippage.** Net 60 is a promise about day 60, and your actual days sales outstanding (DSO) is the number that costs money. A book that runs 14 days past term on average is a Net 74 book, which costs about 1.42% at a 7.00% prime rate ([Federal Reserve H.15](https://www.federalreserve.gov/releases/h15/), October 2026; Deploi arithmetic).
1. **Bad debt.** Use your realized write-off rate on wholesale accounts over the last three years. If you don't have one, that is the finding, and it comes before the terms policy.
1. **Collections labor.** On Shopify that person gets up to five reminder emails, from the due date to 30 days after ([Shopify Help Center](https://help.shopify.com/en/manual/fulfillment/managing-orders/payments/deferred-payments), October 2026), and no aging buckets. Count their hours honestly, because this line grows with the account count rather than with revenue. [Our receivables aging record](https://deploi.ca/shopify/build-vs-buy/accounts-receivable-aging-and-collections) keeps aging and chasing in the accounting suite (October 2026).

## When does offering Net 60 pay for itself?

Offering Net 60 pays for itself when the contribution margin on the volume the terms actually win beats about 1.15% plus your bad-debt rate. The 1.15% is the carrying cost at the 7.00% prime rate ([Federal Reserve H.15](https://www.federalreserve.gov/releases/h15/), October 2026). Terms buy order size, order frequency and displacement of a competitor who doesn't offer them. The test we use: would this account have placed this order, at this size, paying up front? If yes, the terms are a price cut you left off the price list. If no, compare the carrying cost plus bad debt against the margin on the increment. In our judgment most wholesale gross margins clear that bar, which is why terms are standard. So the discipline belongs on which accounts get terms, not on whether to offer them.

## Which wholesale accounts should get Net 30, Net 60 or Net 90?

Give Net 30 to most wholesale accounts, Net 60 to accounts with clean history and real volume gains, and Net 90 only against a limit you can enforce. In our judgment the term follows payment history, not account size:

- **Payment up front** for any account in its first two orders, regardless of size. The reference check is the two orders.
- **Net 30 as the default**, because it is the shortest term the market treats as normal. It halves the carrying cost of Net 60: 0.58% against 1.15% at a 7.00% prime rate ([Federal Reserve H.15](https://www.federalreserve.gov/releases/h15/), October 2026).
- **Net 60** where payment history is clean and the volume increment is real. Price it: a 1 to 2% terms differential against the Net 30 price list is defensible and easy to explain.
- **Net 90** only against a signed credit application with a limit you can enforce. Shopify doesn't enforce limits natively, which is why [our credit limits record](https://deploi.ca/shopify/build-vs-buy/b2b-credit-limit-and-order-hold-management) scores enforcement BUILD (October 2026).

## When should you refuse terms to a large wholesale account?

Refuse terms to a large wholesale account, whatever its size, when the risk sits outside the interest line.

> **When not to do this**
> - **When the account is already past due on an existing order.** Shopify labels the late order Overdue in customer accounts and doesn't capture payment ([Shopify Help Center](https://help.shopify.com/en/manual/b2b/checkout-and-orders/payment-terms), October 2026). Nothing native stops the next order either, as [our credit limits record](https://deploi.ca/shopify/build-vs-buy/b2b-credit-limit-and-order-hold-management) found (October 2026).
> - **When the account is more than a fifth of receivables.** That threshold is our judgment: concentration is a bigger risk than rate, and no interest arithmetic captures it.
> - **When the request arrives with a purchase-order process you haven't seen.** In our judgment, long approval chains inside the buyer are the usual cause of "we always pay late, it's just our payables cycle."
> - **When you'd rather someone else carried the risk.** A financing provider pays you and waits out the term for a fee, so [compare trade credit with native terms](https://deploi.ca/shopify/faq/shopify-b2b-trade-credit-invoice-financing) first.

*This page describes commercial modelling, not financial, credit or accounting advice. Rates and write-off assumptions are yours to set with your own advisors.*

## Deploi's point of view

**Where we disagree.** The standard framing is "offering terms costs you the interest." The interest is the cheapest part and the easiest to hedge. The expensive parts are slippage, concentration and the labor of chasing, and none of them appear in the vendor spreadsheets that make the case for net terms.

**What we tell clients to do first.** Pull realized days sales outstanding (DSO) by account before setting any terms policy. In our judgment a missing DSO baseline is the finding in itself, because a terms policy set without one is a policy nobody can later prove worked.

**What we refuse to quote.** an industry-average bad-debt rate or an industry-average DSO to fill the gap in a client's model. We do not have a published one that would survive scrutiny, and a borrowed benchmark in a cash-flow model is worse than an acknowledged hole.

**What this page adds.** the carrying-cost arithmetic at a dated reference rate, the three costs outside the interest line, and the account-level thresholds at which each term becomes defensible.

## When this answer changes

- The bank prime rate in the Federal Reserve's H.15 release moves from 7.00%: rerun the carrying-cost table.
- Your realized days sales outstanding (DSO) drifts more than 10 days past term on your largest accounts.
- Shopify adds credit limits, or blocks the next order from an account with an overdue balance.
- Shopify starts capturing payment automatically when payment terms expire.
- A financing provider quotes a fee on your largest accounts below your carrying cost plus bad debt.

## Sources

1. [Federal Reserve, H.15 Selected Interest Rates (Daily)](https://www.federalreserve.gov/releases/h15/), checked October 9, 2026
2. [Shopify Help Center, Managing orders with deferred payments](https://help.shopify.com/en/manual/fulfillment/managing-orders/payments/deferred-payments), checked October 9, 2026
3. [Shopify Help Center, Setting up payment terms in B2B](https://help.shopify.com/en/manual/b2b/checkout-and-orders/payment-terms), checked October 9, 2026
4. [Deploi Build vs. Buy, Should You Build or Buy Net Terms & B2B Payments on Shopify?](https://deploi.ca/shopify/build-vs-buy/net-terms-and-b2b-payments), checked October 9, 2026, Deploi research
5. [Deploi Build vs. Buy, Build or Buy B2B Credit Limits and Order Holds on Shopify?](https://deploi.ca/shopify/build-vs-buy/b2b-credit-limit-and-order-hold-management), checked October 9, 2026, Deploi research
6. [Deploi Build vs. Buy, Build or Buy Receivables Aging and Collections on Shopify?](https://deploi.ca/shopify/build-vs-buy/accounts-receivable-aging-and-collections), checked October 9, 2026, Deploi research