Grainger is a large hardware store chain that sells supplies to construction contractors. This company has more than 200 warehouse stores located throughout the United States. It’s strongly dedicated to customer service and will even open a store after hours just for you if you’re in a rush to buy supplies, although it might charge you an additional $50 for that service. And like other major hardware stores, Grainger also has a Net 30 trade credit program. The retailer doesn’t promote this program as much on its website as some of its competitors do, though, but information about the program is still available on its Terms of Service page.
Grainger’s Net 30 Program
Grainger offers Net 30 trade credit to customers who qualify for credit with the company. The store also asks its trade credit users to use a specific payment method and invoice format. You’re expected to use electronic funds transfer (EFT) to send the payment and the invoice should use the CTX 820 format. These requests indicate that Grainger is automating parts of its accounts receivable process. The hardware store will accept other payment methods, such as credit cards, but it prefers EFT. Grainger doesn’t offer any other trade credit options.
Personal Guarantee Requirement
The hardware store’s Terms of Service page basically says that any entity that purchases products with your business account is also fully liable for the bill if your business doesn’t pay it. So if you plan to make purchases with your business account at the hardware store, the store is effectively asking you to personally guarantee that your business will pay the invoice.
Late Payment Fees
Grainger charges a late fee of 1.5 percent per month if you don’t pay your Net 30 invoice by the due date. That’s the standard late fee for these short-term trade credit programs and other hardware stores charge similar penalty fees. However, the hardware store also warns customers that if they don’t pay a Net 30 invoice on time, the store may ask them to pay the invoice immediately and they might not be eligible for trade credit in the future.
A 1.5 percent penalty might seem like a small price to pay in comparison with other short-term financing options if you don’t have enough cash to pay the invoice at the end of the month. So it’s important to understand that Grainger, and its peers, might assess additional penalties if you pay a Net 30 invoice after the deadline.
Subaccounts
The Grainger Terms of Service page does not say whether a company can set up subaccounts under its Net 30 program, but the company’s affiliates and subsidiaries can make purchases from Grainger using the company’s account.
Other hardware stores allow Net 30 trade credit users to create subaccounts for their employees. Subaccount holders may receive their own payment cards so they can shop at retail stores. And competing hardware distributors have also released apps that allow the company to manage its subaccounts. These apps allow the company to track the spending of individual employees on its account and can also be used to allow or block purchases by specific employees.