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Supplier Terms vs. Material Financing: Why Material Financing Wins Out Every Time

Published: August 31, 2022
Last updated: December 28, 2022
Read time: 4 minutes

Some subcontractors have a pattern of doing business with particular suppliers, and consistently using their terms. But that doesn’t mean it’s the best way they could be doing business. In fact, by using terms, they may be doing themselves a disservice. 

Material financing is an alternative to terms that’s been gaining traction the last few years — but what does it really have to offer? We’ll dive into the pros and cons, a lot of which you might not know, about supplier terms and material financing, and why one emerges as the clearly better choice for your business. 

Terms: Bad for the Supplier, Bad for You?

Let’s let you in on a secret. 

You know that supplier who always gives you 30-day terms? 

There’s a good chance they don’t like doing it. 

Sure, they’re happy to cut you a break on some level, but if they could get by without offering terms, they’d probably prefer it. The thing is, suppliers offer terms to be flexible with their subs and ultimately get more materials off the shelves. But offering terms is a logistically heavy-lift, with lots of work and red tape that goes on behind the scenes. It forces a supplier to suddenly operate like a financial entity: getting the customer set up with credit, credit insurance, public bonds, trade references and chasing down payments when a customer is late. Plus, there are always a few awkward conversations when they can’t extend terms to someone. 

Offering terms distracts from their core business model. They’d rather be doing what they do best: selling materials. Getting paid up front by every customer is the ideal, but they offer terms because they don’t think it’s a reality. 

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Not to mention, just about everyone will use 30-day terms, but no one will pay on that day. The supplier bites the bullet on that. And even if suppliers don’t charge interest, there are still consequences for not paying on day 30. The supplier may hold back additional purchases because you still have an outstanding balance with them, and not just on this purchase — on your entire account. That means the simple act of using terms puts your entire project (and potentially others) in jeopardy. If you can’t make the payment, you run the risk of being denied the materials you need to finish the project. 

Some subs will throw the payment on their credit card to extend another 30 days, which is what we call “stacking terms.” But that’s just as dicey because you’re incurring interest. You then have to keep track of all these terms, and it takes a lot of paperwork. Subs are inherently creative with managing their finances, but as discussed above, that comes with quite a bit of uncertainty. We ask you: Why go through all that trouble when you can just use Billd and get 120 days to pay for your materials off the bat? The other option is eating up your credit limit, accruing insane interest, and not reserving your credit lines for emergencies.

So it’s not great for suppliers, but if it’s necessary to you as a subcontractor, it’s fair to say you’ll continue to push for terms to be available. It’s just business, and you need terms to get the ball rolling on that next project. But here’s the thing: you don’t. 

Terms hold you back just as much, if not more, than your supplier. 

What You Miss Out on When You Use Supplier Terms (Instead of Material Financing)

We talked about why terms can be bad for suppliers. But why are they bad for you? More specifically, why do they fall short when you compare them to material financing? 

  1. Cash Discounts – This is a huge, win-win aspect of material financing that supplier terms will never have. When you buy with terms, you’re forcing your supplier to wait a month or more to see payment on those materials — the same way you wait for month(s) on end for the GC to pay you. Cash flow is king, so the sooner you have money in your pocket, the better. Same goes for your supplier. And that’s something they’re willing to incentivize. If you had paid upfront and in full, like you can with material financing, the supplier is often very willing to offer lucrative discounts on the amount you’re purchasing. Those discounts stack up over time, and equal huge savings for your company that pad your bottom line. 
  2. Peace of Mind that the Job Stays on Schedule If you use supplier terms and those 30-day invoices hit when you don’t have the money, you’re in deep water. This is a risk you take with terms. They don’t take kindly to late payments. They could mean the supplier will withhold future material deliveries and throw a wrench in the project timeline. This risk isn’t just irresponsible, it’s avoidable. 
  3. Working with More Suppliers Not every supplier offers terms, and if you rely on them, you limit yourself to exclusively working with suppliers who do. With material financing in your toolbox, you can work with just about any supplier because you’re paying upfront and in full. More suppliers could mean better quality materials, or less potential for supply chain delays, all of which leads to more quickly and efficiently completed projects and a happy GC. 
  4. Becoming Your Supplier’s Best Customer It’s simple. Suppliers like subs who pay cash in full on every purchase — something material financing enables them to do. Unlike supplier terms, there’s zero credit risk to them. With a strong payment history like that, there’s a chance you’ll develop greater leverage with your supplier. As an example, they might be more likely to fulfill rush orders or expedite deliveries.

Material financing has slowly established itself as a rock solid alternative to the time-honored tradition of supplier terms. With both these options at your disposal, it’s fair to ask which one you should use. To learn more about material financing and how it works, visit To get started with enrollment, visit

About Billd: At Billd, we provide a payment solution that enables commercial construction contractors to free up cash for material purchases while enjoying the flexibility of 120-day payment terms. You get financing for commercial materials upfront with the freedom to pay it back at your own pace. Learn more about how we can help eliminate your company’s cash-flow problems so you can win more bids and grow your business.

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Jesse WeissburgCCO & Co-Founder of Billd

Jesse Weissburg is an accomplished business development leader with experience across a variety of industries — including finance, real estate development, construction and renewable energy. With Billd, he uses his experience and knowledge to help contractors grow their businesses by fixing the broken payment cycle in the construction industry.

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