How Electronic Manufacturer Extend Credit to New Customer – Electronic Contract Manufacturing “Net 30 Credit”
Electronic contract manufacturing services provide its customers a contract design. These EMS providers are delivering a number of services such as global distribution, supply chain management, customer support and logistics.
Extending credit to the customers allow them to purchase the services today and pay for them later. When the business accepts credit card payments, invoices and personal checks from the customers, it is assumed that the customers have the money to pay for the transaction. Such companies extend credit on the basis of these assumptions:
- The customer is willing to pay back
- The customer has the potential to pay back
- Nothing will keep the customer from paying
After determining the amount of payment, the company needs to set the payment terms. The most common term in extending credit is net 30 credit. It means that the customer is given 30 days from the date of the invoice to pay. The terms of payment are quite extensive. However, these terms of payments are altered according to the terms of the industry. Companies that extend credit to customers have a general rule of thumb to have shorter terms of payment for high-credit risk customers. These terms are carefully monitored by the company to get rid of any potential losses. In other words, the customers are kept on a leash. However, strong and established customers often have extended payment terms.
The electronic manufacturer companies who extend credit line to their customers must understand the paying habits of the customers. Cycles need to be debated in order to manage the flow of cash properly. The biggest corporation and large companies leverage the terms of the payment for the supplier. If an electronic contract manufacturing net 30 credit is offered by a business, then the customers will pay the payment in about 60 days. If the customers take discounts for paying in 10 days, they would still take it if they don’t pay for 45 days.
Big customers need allowances in extending credit lines. Businesses change the terms of payments by stretching the payment term of net 30 credit. Some would assume that such customers have been defaulted. However, they make the most of their deep pockets. They use their size to leverage the terms of payments. It is based on their liking.
Electronic manufacturing services net 30 credit terms of payment are either from the date of invoice or from the date in writing. The net 30 credit payment term is subject to the company’s approval of the buyer credit. The electronic manufacturing service has the authority to revive the payment term anytime. In any event, if the payment is not received within the 30 day period, companies offer additional coverage. It includes net 1 year double warranty. The limit of electronic manufacturing additional warranty is five years. However, the warranty terms of the company still apply.
The option of extending credit for net 30 credits allows the customers to focus less on the price. It brings more sales and improves customer relations.
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