Net-60 vs Net-90: How Payment Terms Reshape Your Purchase Order Loan

Why 30 Extra Days of Payment Terms Costs Far More Than 30 Days

Most suppliers read payment terms as a line item: net-60 with one retailer, net-90 with another. The gap looks like 30 days. It is not.

A 30-day extension stacks two cost streams at once. Your operating expenses keep running for another month, and the production capital you borrowed keeps accruing financing charges for that same month. On a $400,000 order, moving from net-60 to net-90 can add roughly $10,000 to your total financing cost (as modeled below), same goods, same margin, same retailer. Run four of those orders a year and you are paying close to $40,000 extra for nothing but the calendar.

For a brand on thin margins, that swing decides whether an order is profitable or break-even. The right purchase order loan structure, then, depends less on the size of the order than on how long the retailer makes you wait to get paid.

This piece models two scenarios side by side (a net-60 order and a net-90 order of identical size) to show exactly how payment terms reshape both your financing structure and your total cost. The numbers below use illustrative market assumptions, not Bridge quotes; rates vary by deal and underwriting.

Scenario A: The Net-60 Working Capital Model on a $400K Target Order

A net-60 order from a retailer like Target or Walmart fits inside a single purchase order financing facility. Here the gap is long enough to strain cash but short enough that one structure covers it cleanly.

Assume a $400,000 Target purchase order with a 40-day production run, 10-day shipping, net-60 payment terms, and $10,000 per week in operating expenses. The cash timeline runs like this:

At the Day 40 peak, you have committed $400,000 in production cost plus about $40,000 in operating expenses carried across the period, roughly $440,000 of working capital tied up in one order. The full cycle runs 115 days, or about 3.8 months from purchase order to payment.

A single purchase order financing facility covers the gap. At an illustrative 3.5% per month across 3.8 months, financing costs 13.3% of the advance. On a 75% advance of $300,000, that works out to about $39,900. No stacking, no second facility, no extra coordination. Net-60 is the band where one well-structured facility does the whole job.

Scenario B: The Net-90 Working Capital Model on a $400K Kroger Order

Hold everything constant and change only the payment terms, and the cost jumps. Kroger standardized supplier payment terms to net-90 in 2018, as reported by Perishable Pundit, which published the original supplier letter. The company later carved out an exception for produce suppliers protected under the Perishable Agricultural Commodities Act after industry pushback, PYMNTS reported, but net-90 remains the standard for most packaged-goods vendors. Among the big-box retailer set, that is the most severe payment cycle a CPG supplier routinely faces, and it is badly underserved by financing built for shorter gaps.

Same $400,000 order, same 40-day production, same operating burn. Only the wait changes:

Peak capital committed is the same $440,000. The duration is not. The cycle now runs 145 days, about 4.8 months. A single purchase order financing facility at 3.5% per month across 4.8 months costs 16.8% of the advance. On the same $300,000 advance, that is about $50,400.

The difference between the two scenarios is $10,500 on one order, driven entirely by 30 extra days of waiting. For a supplier running four Kroger orders a year, that is roughly $42,000 in added annual financing cost attributable to the payment terms alone. The order economics did not change. The calendar did.

When a Single Facility Stops Being the Cheapest Option

Past net-90, a single purchase order financing facility held for the full cycle is rarely the cheapest path. The reason is that purchase order financing carries its rate the entire time, even after the goods ship and the risk profile drops. Once product is delivered and the invoice is approved, the lender is no longer financing an unfulfilled order. It is financing an approved receivable, which is cheaper to fund.

A stacked structure prices each stage to its actual risk:

• Stage 1, Days 1–50 (production and shipping): purchase order financing at roughly 3.5% per month, covering supplier deposits and the production balance.
• Stage 2, Days 50–85 (goods delivered, invoice approved, not yet paid): convert to an inventory loan at roughly 2% per month, a lower rate because the goods now exist and the invoice is approved.
• Stage 3, Days 85–145 (waiting on retailer payment): use the retailer’s third-party accounts-payable financing program to accelerate payment, at roughly 1.5% of the invoice for about 60 days of acceleration.

Run the math on the $400,000 Kroger order: purchase order financing of $300,000 × 3.5% × 1.7 months ≈ $17,850, plus an inventory loan of $300,000 × 2% × 1.2 months ≈ $7,200, plus the accounts-payable program at $400,000 × 1.5% ≈ $6,000. Total stacked cost is about $31,050.

Against the $50,400 single-facility cost, the stacked structure saves roughly $19,350 per order. It demands more coordination (three handoffs instead of one), but on a repeat Kroger relationship, saving $19K an order is worth the operational work. The same logic applies to other long-cycle retailers. Home Depot, for instance, runs a supplier finance program that lets vendors take early payment at a discount, with $333 million in outstanding obligations under it as of November 2, 2025, per its Q3 fiscal 2025 10-Q.

The Payment Term Threshold Table

Use payment-term length as the first variable when choosing a structure. The table below maps each term to its gap severity, the structure that usually fits, and the approximate all-in financing cost as a percentage of purchase order value.

The threshold is clearer than most suppliers expect. Through net-60, a single facility is almost always the right call because the coordination cost of stacking outweighs the savings. At net-90, stacking becomes worth modeling. At net-120, which some large retailers’ terms can reach, a single facility held for the full cycle is the expensive default; a stacked structure is close to mandatory for protecting margin.

The pressure is real and widespread. In the Federal Reserve’s 2025 Small Business Credit Survey, about one-third of applicant firms still faced a funding gap despite applying for financing, and the share applying at online lenders rose for the fifth consecutive year, a sign that traditional facilities often do not fit the working-capital reality long retailer terms create.

Five Ways to Reduce Long Payment Terms Without Renegotiating Them

You can cut the cost of a long payment cycle without persuading the retailer to pay faster. Five tactics do most of the work, in rough order of impact.

1. Enroll in the retailer’s AP or supply-chain finance program immediately. Enrollment lag is the most avoidable cost in the entire cycle. If Kroger or Home Depot offers early-payment acceleration, the days you spend not enrolled are days you finance at the higher purchase order rate for no reason.
2. Negotiate shorter terms where you have leverage. Even moving net-90 to net-75 reclaims real money. For retailer-specific tactics, see our guide to how Walmart pays its suppliers and how terms get set.
3. Use milestone-based draws instead of one upfront advance. Drawing as production hits milestones means you pay interest only on deployed capital, not on the full advance sitting idle from Day 1.
4. Convert from PO financing to an inventory loan once production completes. The holding period after delivery carries lower risk, so it should carry a lower rate. Leaving it on the PO facility overpays for the back half of the cycle.
5. Push for faster invoice approval from the buyer. The payment clock often starts at invoice approval, not delivery. Every day you shave off approval time is a day off the financing meter.

How Bridge Helps Suppliers Facing Long Retailer Terms

Suppliers facing net-90 from Kroger or net-120 from Home Depot need capital that understands the extended cycle and structures facilities to match it, not a one-size facility priced for a 30-day gap.

Bridge is the direct lender for purchase order financing tied to Walmart and Sam’s Club supplier transactions, funding up to 100% of COGS on approved deals. Approval does not require a formal PO in hand. A buyer email, buy plan, or producer invoice can also qualify a deal for underwriting. For suppliers managing extended retailer terms, Bridge funds production and supplier costs so operating cash stays available for the rest of the business. Request Financing.

FAQs

Why does net-90 cost so much more than net-60 if the order is the same size?

Because financing cost is a function of time, not just amount. A net-90 order keeps your production capital borrowed for an extra 30 days and keeps your operating expenses running across that same window. On a $400,000 order, that typically adds around $10,000 to total financing cost versus net-60, even though the order value and margin are identical.

At what payment term should I stop using a single PO financing facility?

Net-90 is the practical threshold. Through net-60, a single purchase order facility is almost always cheapest once you account for coordination cost. At net-90 and beyond, a stacked structure (PO financing during production, an inventory loan after delivery, then a retailer AP program for the final wait) often saves five figures per order by pricing each stage to its actual risk.

What is a stacked financing structure?

It is a sequence of facilities matched to the phases of an order. Purchase order financing funds production, an inventory loan covers the post-delivery holding period at a lower rate, and the retailer’s accounts-payable program accelerates the final payment. Each stage costs less than carrying a single high-rate facility for the whole cycle.

Does Kroger really pay on net-90 terms?

Kroger standardized supplier payment terms to net-90 in 2018, later exempting produce suppliers protected under the Perishable Agricultural Commodities Act after industry pushback. For most packaged-goods vendors, net-90 remains standard, making it one of the longest routine payment cycles in the big-box set.

Can purchase order financing sit alongside my existing credit line?

Yes. Purchase order financing is not a replacement for a working-capital line or asset-based facility. It funds the production gap tied to a specific retailer order and can layer on top of facilities you already hold, subject to underwriting and any intercreditor terms.