Setting Up a Net-30 Credit Program for Salon Wholesale Clients
If you’ve sold wholesale hair to salons for more than six months, you’ve gotten the ask. “Can I pay net-30 on this order?” A lot of newer suppliers freeze up here, worried they’ll get stuck with unpaid invoices and tank their cash flow if they say yes, or lose their most consistent regulars if they say no. We’ve run net-30 terms for our salon clients for 8 years now, and we’ve made every dumb, costly mistake in the book so you don’t have to.
Why even offer net-30 in the first place?
It’s not just a “nice to have” for big corporate distributors. For most salon owners, cash flow is lumpy. They cut rent checks on the first, pay stylists every two weeks, and stock retail on a schedule that doesn’t always line up with a busy install week. A lot of owners can easily cover the cost of bulk hair for braiding once they get paid from that week’s clients, but can’t swing the full order cost three weeks out when they need to stock up. We saw our average order value jump 32% for clients on net-30 vs. prepay, because they don’t hold back on stocking extra lengths for last-minute bookings. That said, it’s not free money. When you offer net terms, you’re acting as a short-term lender. You will have late pays. You might even have a small write-off here and there. It’s not a set-it-and-forget-it perk, and you never have to offer it if your cash flow is too tight right now.
The non-negotiable paperwork you need first
You don’t need a fancy 10-page contract from a big-firm lawyer, but you do need a signed, simple one-page credit application before anyone orders on terms. That app needs four things: the salon’s legal business name and EIN, the owner’s full name and signed personal guarantee, three wholesale vendor references they’ve had net terms with for six+ months, and a record of their past orders with you. That personal guarantee is non-negotiable. We learned this the hard way in 2017, when a local salon folded two weeks after a $1,200 net order, and their LLC shield meant we had zero recourse because we skipped that line. You don’t need expensive credit checks for accounts under a $500 initial limit, either. Just call those three references and ask straight: how long have they offered terms, average pay time, any invoices over 15 days late? We post our base eligibility rules on our FAQ page so clients don’t waste time applying if they don’t qualify.
Structure terms to protect your cash flow first
It’s easy to focus on what the salon needs, but if you structure terms around their cash flow only, you’ll end up short when your own bills come due. Remember: we pay production two weeks before stock hits our warehouse, and we hold steady inventory of machine and hand-tied wefts so orders ship in 3-5 days. That means every net-30 order is money we’ve already spent, waiting to be paid back. Our rule to avoid overextension: cap total outstanding net-30 credit at 15% of average monthly wholesale revenue. If you do $20,000 a month in wholesale, that’s $3,000 total in unpaid net invoices at any time. Start every new net client on a $300 to $500 limit, no exceptions. Be clear the 30-day clock starts the day the order ships, not when they open the box. Add a 1.5% monthly late fee for balances over 30 days (check your state’s rules) and don’t waive it for first offenses unless there’s a verifiable emergency. Budget for 10-15% of clients paying 3-7 days late. Never count on that invoice money to make payroll on the exact due date.
Hard lines for who qualifies
We get pushback here, but these rules have kept our bad debt rate under 0.5% of total sales for six years, so we don’t bend them. We automatically turn down applicants who meet any of these criteria:
- Fewer than 3 consecutive on-time prepay orders
- Any history of valid chargebacks on kept orders
- References note repeated late pays or bad debt
- Refusal to sign the personal guarantee
If a client stays in good standing for 6 months—paying every invoice on time, no chargebacks, no trivial complaints—we raise their limit by 25-50% as a thank you. Many of our long-time, high-limit clients started at $300, and they rarely shop around because the terms work for them. That loyalty spills over, too: they’re more likely to follow our guidance on client extension aftercare, refer other salon owners, and test new textures before wide launch.
When invoices run late
Don’t panic. Send a friendly reminder the day after the due date. Most late pays are simple bookkeeping mistakes. If you don’t hear back in three days, call. Set up written payment plans for clients who are short, pause their net access until paid. If they withhold payment over product issues, follow your standard process for matting or shedding RMA claims, apply credits, collect the rest. Lock accounts at 45 days, send a demand at 60. We’ve only written off $1,800 in bad debt in 8 years this way.
Quick questions
Do I have to offer net-30 to everyone?
No. We turn down 60% of requests, and most salons still order prepay. Don’t offer terms until you have cash to float a few late payments.
Are early pay discounts worth it?
We tested 2%/10 for two years. It didn’t move pay times, just added work.
Start small, stick to your rules, and don’t rush to offer terms before you’re ready. Your cash flow will thank you.
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