Supply-house terms vs. a line of credit

Your supply-house account is the cheapest money in the trade, and it is for one thing: materials that turn inside its terms. A line of credit is for the days a job outruns those terms and for the things the counter does not sell. An advance is the wrong shape for a materials buy almost every time. Here is the account in the distributors' own words, one repipe put on the calendar against it, the same eight days priced three ways, and the cost of being late that no service charge measures.

How supply-house terms work

Most of a plumbing or HVAC shop's stock is already financed, by the distributor, on dated terms, and the terms are public. Carrier Enterprise's credit agreement is net 10th prox, the tenth of the following month, with cash before shipment if the account does not justify the terms (the credit application, 2026-09-24). Johnstone's is net 10th, with open-account terms for firms with established credit, cash on delivery before that, a credit report pulled on the way, and a service charge on past-due accounts (Johnstone's sales policy, 2026-09-24). Net 30 is described as the common expectation for established contractor accounts (Resolve, 2026-09-24). Ferguson's business-credit page and the plumbers' own forum describe the way in: a personal guarantee on a start-up, a credit check, a bank reference and trade references, and new accounts starting on cash until credit is established (Ferguson and PlumbingZone, 2026-09-29).

Read those together and the account is a short line of credit for materials, priced at nothing inside its terms, underwritten on your trade history, and revoked by going back to cash. Within its terms it is unbeatable, and nothing on this site or anyone else's is cheaper. Everything below is about the edges of it.

One job, from materials to payment

Take a repipe, as an illustration and not any job. Sold for $18,000 to a homeowner who pays at completion. Materials, $12,000, on the supply-house account on day 0, net 30.

Case A, the ordinary one. The job closes on day 12. The homeowner pays $18,000 at completion. The account is paid on day 25, inside terms. The materials were financed for twenty-five days by the supply house, and the money cost nothing. This is most jobs, and it is why the account is the incumbent.

Case B, the one that happens. An inspection slips, the job closes on day 35, and the homeowner pays on day 38. The account was due on day 30. For eight days, $12,000 is owed to the supply house and the job has not paid. Three ways to cover the eight days:

Illustration, not a quote. The 24% is the line-of-credit calculator's starting position; the 1.30 is the site's usual factor rate, worked on the advance guide. Real terms come from a funding partner and from your distributor.

That table is the whole comparison in one row of days. A line's right shape in this trade is not a months-long loan for materials; it is a days-long bridge for the gap between the day the account is due and the day the customer pays, and at that length it costs less than the coffee on the job. An advance for the same gap costs more than fifty times as much and runs for months after the gap has closed. The advance-against-line guide prices the two over a full term; on an eight-day gap the comparison is not close.

What being late really costs

The service charge is the small number. The large one is the account.

The distributors' own policies say what happens to an account that does not justify its terms: cash before shipment, cash on delivery, credit not extended. Going back to cash does not mean paying a fee; it means the next $12,000 of materials has to be in your account before the truck is loaded, for every job, until the terms are earned back. That is the loss of the trade's working capital, and it is the reason the eight days in the table are worth a line, a call to the branch, or a conversation with the homeowner about a progress payment, and never worth letting the account go past due because the money was "coming Friday".

Put it the other way round. The supply house is the cheapest money you will ever have in this trade, and it is the easiest to lose, because it is underwritten every month on whether you paid last month.

What the account can't pay for

Only what the counter sells. That is the edge most owners find by accident.

The account does not pay a tech's wages for the six weeks before their billing catches up. It does not buy the first month of stock for a second truck before the calls fill it, or rather it does, and then wants paying on the 10th whether the truck billed or not. It does not pay for a jetter or a press tool, which are equipment and priced as such. It does not carry a slow spring. Those are working capital in the ordinary sense, and they are the honest case for a line, or, early in a business's life when a line is not open, for an advance sized against ordinary weeks rather than a freeze month. The plumbing page lays out which of those is which; the seasonal guide has the calendar for the slow stretch.

So the question is never "the account or a line". It is "what is this money for". Materials that turn inside terms: the account, always. Everything else: the account cannot help, and the comparison is between a line and an advance, which is a different page.

When a line of credit beats the account, and when it doesn't

The line wins in four cases, and they are all about the terms not fitting the job.

1. The account is still on cash and the job is sold. A new business in its first months with a repipe on the board and a distributor that wants paying at the counter. A line, if one is open, buys the materials at the price of a few weeks' interest; the alternative most owners take, the personal card, buys them at the card's rate and leaves no record in the business account.
2. The limit is smaller than the job. An account sized on a history of $3,000 truck-stock orders does not stretch to a $12,000 repipe on the day. The line covers the difference; the account grows into the next one.
3. The job outruns the terms for a reason you can date. The inspection, the permit, the part on back order. Case B above: eight days, about $63.
4. The customer pays on their own terms. A property manager on net 30, a small commercial job billed on completion and paid in six weeks. The materials are due on the 10th; the invoice pays on day 45. That gap is a line's shape, if the work is a slice of the month; if it is most of the month, it is a receivable and a different product.

The account wins everywhere else, which is most of the trade: truck stock that sells inside the month, water heaters for jobs that close in a week, the ordinary flow of materials against work paid at the door. Do not draw a line for what the account already finances free. And do not put the account's balance on a line to "keep the account clean"; the account is clean when it is paid from the job, and the line's interest for that is money for nothing.

Why paying the supply house on time helps you get a line

One more reason the account matters more than its size. It is part of the file the cheaper money is underwritten on later. A credit application at a distributor asks for trade references; so, in my read, does the underwriting behind a line, directly or through what the statements show. The supply-house settlement leaving the business account on the 10th every month is one of the scheduled outflows a partner reads, and a run of them paid on time is a record of a business that pays what it owes when it owes it. The bank-statements guide goes through the rest of that file.

So the order is: pay the supply house from the job, on time, every time; draw a line only for the days a job outruns the terms or the things the counter cannot sell; and ask for a line of credit before the week you need it, because the account is not the only money in the trade that is arranged in advance. If the need is the tech, the stock or the slow spring rather than the materials, the form takes about two minutes, asks for bands rather than figures, and I do not run credit on it. Partners underwrite and decide. If the need is the materials for a sold job, pay the supply house first.