Pay as You Go or Open an Account? Merchant Credit, Explained Without the Sales Pitch

There's a moment in every merchant's week where a customer leans on the counter and asks whether they should open an account. The answer is not always yes. Anyone who tells you it is, is thinking about their own cashflow rather than yours.

So let's go through it honestly. Two ways to pay, warts and all.

The case for paying as you go

Paying on the day is underrated. It's unglamorous, it doesn't come with a nice card in your wallet, and you don't get a monthly statement that makes you feel like a proper business. But it does three things well.

First, you know exactly where you stand. Every job is costed the moment you buy the materials. No reconciling receipts at month end, no discovering that a job you thought made money was quietly funded by an invoice you forgot about.

Second, it keeps you honest on price. When the money leaves your account on a Friday, you notice. When it goes on a statement and settles in thirty days, it's remarkable how little attention a twelve per cent overspend on bricks gets.

Third, no paperwork. No credit application, no guarantee, no annual review. Walk in, buy, walk out.

It suits small outfits working job to job. It suits one-man bands who price everything the same week they buy it. And it suits DIY customers who are doing a kitchen once and will never darken our door again — genuinely, we'd rather you didn't open an account for one bathroom.

What a trade account actually gives you

Now the other side. A properly run account isn't just delayed payment. That's the least interesting part of it.

It gives you a price file. Agreed rates on the lines you buy regularly, held for the year, so you're not renegotiating every time you walk in. If you're buying the same blocks and the same bags of mortar week after week, that's worth real money over twelve months.

It gives you a paper trail built for accountants. One statement a month, itemised per site if you ask us to, which means less shoebox-of-receipts come January. If you're VAT registered and doing half a dozen jobs at once, this alone can be reason enough.

It gives you the ability to send someone else. A trusted labourer or a subbie can collect against your account without you handing over a card. Handle that with care, mind — we'll talk about it below.

And it gives you breathing room on a big buy. When a job needs four grand of materials up front and the client isn't paying until the end of the month, an account bridges that gap without you raiding savings.

The bits that people don't ask about

This is the part worth reading twice.

Credit limit. Accounts come with one, and it's not an insult — it's a number. Go over it and things stop working. Ask what yours is likely to be and, more importantly, ask what the process is for raising it. A merchant who can't answer that clearly is one to be cautious about.

Payment terms. Thirty days is the default, but ask from when — invoice date, statement date, or end of month. Those three can differ by a fortnight, and a fortnight matters when your own client is slow.

What happens when you're late. Ask directly. Is there interest? Is the account suspended at a certain point? Is there a charge for a returned payment? Nobody minds a clear rule; everybody minds discovering it in a letter.

Returns on account. Cash customers usually get a refund. Account customers usually get a credit note applied to the balance. Those are not the same thing for your cashflow, so know which one you're getting and how long it takes to appear.

Personal guarantees. If you're a limited company, you may be asked to sign one. It means that in the worst case, the debt follows you personally. Read it properly rather than skimming it because the rep is friendly.

Who can spend on it. Named collectors, spending limits per person, and a rule about phone authorisation. Worth sorting on day one, before a misunderstanding costs you a friendship.

The questions to ask before you sign anything

Six things, in this order:

1. What's my credit limit, and what's the process for reviewing it?
2. What exactly are my payment terms, and from which date do they run?
3. What are my agreed rates, and how long are they held for?
4. How do credits and returns work, and how long before they hit my statement?
5. What's the process for a disputed invoice, and who do I speak to?
6. Is there anything in this I'm personally on the hook for?

If a merchant can't answer those six plainly, in a language that isn't corporate, walk away. There are plenty of us about.

So which should you pick?

Jobbing builder, two or three jobs at a time, regular repeat buys. An account, almost certainly. The price file alone will earn its keep, and the monthly statement will tidy up your bookkeeping.

Small outfit, one job at a time, tight margins. Honestly? Try cash for a few months. If you find yourself turning down work because you can't fund the materials up front, that's your signal to open an account — and by then you'll know exactly what you'd use it for.

Landscaper or groundworks firm on big seasonal buys. An account, but with a conversation first about limits, because you'll blow through a modest one in a single week in spring.

DIY customer doing one project. Pay as you go. Don't open an account for a bathroom. We'll happily take your card and you'll save yourself a form and a phone call.

Anyone whose work is genuinely unpredictable. Start with cash, build a relationship, then move over. We'd rather open an account for someone we've seen at the counter for a year than for a stranger with a good pitch.

The last word

The right answer depends on your cashflow, not on ours. If you ring up and ask, we'll ask you two or three questions about how you work and then tell you the truth, even when the truth is that you don't need us to do anything at all.

That's the advantage of dealing with a family firm that's been here since 1952. We're not chasing a sign-up target. We'd quite like you to still be coming through the door in ten years, ideally with a smile on your face.