Should I take on fleet accounts that pay net 60?
Short answer
Only if the volume and margin are worth financing them for two months, and only with a credit application and a hard cap on how much unpaid balance you'll carry at once.
Net 60 means you're the bank, whether you meant to be or not
Every invoice you write on net 60 terms is cash you've spent on parts and payroll today that you won't collect for two months. A shop with several fleet accounts and no cap on exposure can be profitable on paper and still run out of cash to make payroll.
Price and cap it like the financing arrangement it actually is
Build your fleet labor rate slightly higher than retail to account for the float, or hold firm on retail rate but require a hard credit limit per account that you never exceed regardless of how much work they want done.
Run a credit check or at minimum ask for trade references before extending net 60 terms to a new fleet customer. A slow-paying fleet account with a $40,000 balance can put your shop in a real cash crunch fast.
Volume can make it worth it, but verify the volume is real
A steady fleet account that fills bays in your slow hours can be worth the float if the volume is consistent and the margin holds up. Track fleet work separately from retail so you can see whether it's actually profitable once the cost of carrying the receivable is counted, not just whether the bays look busy.
The real cost of carrying a net 60 fleet account
| Monthly fleet billing | $18,000 |
|---|---|
| Average days to collect | 60 days |
| Outstanding receivable carried at any timeroughly two months of billing sitting uncollected | $36,000 |
| Credit limit set for this account | $40,000 cap |
The math: Multiply monthly fleet billing by the number of months of payment lag to estimate the receivable balance you're financing at any given time, then set a hard cap below what would strain your cash flow.
Before signing a new fleet account
- 1.Run a credit check or get trade references
- 2.Set a hard dollar cap on outstanding balance before work is paused
- 3.Confirm the labor rate accounts for the payment float, not just retail rate
- 4.Track fleet work separately in your books to see true profitability
Where owners get this wrong
- Taking on a large fleet account with no credit check because the volume sounded good.
- Not setting a cap, so one slow-paying account can eat your entire cash cushion.
- Judging fleet work as profitable by revenue alone without accounting for the float.
Ask your version of this question
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Now run it against your numbers.
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