How to Check Trade References Before You Offer Net Terms

Net terms look simple on an invoice. Net 30 means the buyer pays within 30 days. Net 60 means 60. In practice, those words transfer a large part of the risk to you. You ship or deliver first. The buyer pays later. If they pay late, dispute the invoice or never pay, you have already spent the money on goods, freight and time.

That is why credit teams ask for trade references before they approve open-account terms. A trade reference is a report from another business that has already sold to the same company on credit. It tells you how that company paid, how long the relationship lasted and whether the seller would extend credit again.

This guide covers how to request references, how to verify the contacts yourself, what to ask on the call, how to weight the answers and how independent, evidence-backed references differ from a list the applicant handed you. The same process works whether you are about to offer net terms to a new buyer or about to accept net terms from a new supplier and want to know how they treat other partners.

What net terms actually transfer

The US International Trade Administration's guide to methods of payment places open account at the high-risk end of the spectrum for the seller. An open-account sale is one where goods are shipped and delivered before payment is due. In international trade that due date is typically 30, 60 or 90 days. The same page notes that foreign buyers often press for these terms, and that exporters who refuse them can lose sales to competitors who say yes.

Payment terms and delivery terms are separate. The ICC's Incoterms rules say who pays for transport and when risk in the goods passes. They do not say when the buyer pays. You can ship FOB and still be unpaid for 60 days. You need both decisions written down: the Incoterm and the payment term, including the date that starts the clock (invoice date, bill of lading date or another clear trigger).

Trade references do not remove that risk. They help you size it. A buyer who pays three other suppliers within five days of terms is a different credit decision from a buyer who is 40 days late with everyone who will talk to you.

What a trade reference is, and what it is not

A useful trade reference answers questions like these:

• How long have you sold to this company on credit?
• What credit limit and terms do you give them?
• What is their average days beyond terms (how many days late, on average)?
• Have you ever put them on credit hold?
• Have they disputed invoices, and how were disputes resolved?
• Would you increase their limit if they asked?
• Would you extend the same terms again today?

What a trade reference is not:

• A credit score or a bureau rating
• A guarantee that the company will pay you
• Legal, financial or investment advice
• Proof that the company is solvent tomorrow

TradeRepute is not a credit bureau. Our trade references are due-diligence evidence from other businesses. They are opinions backed by documents, not ratings. Accuracy is reviewed but not guaranteed. Treat every reference as one data point, then decide your own limit and terms.

Supplier-provided contacts vs independent references

Most credit applications ask the buyer for three trade references. That is a reasonable start, and you should still call them. Know the bias. The applicant chooses who you hear from. Friendly customers, related companies, landlords who are not trade creditors and contacts who no longer work at the company all show up on those lists.

If you use applicant-provided references:

• Look up the reference company's phone number yourself, from its website, company register or a directory you trust. Do not dial the number written on the application.
• Confirm you are speaking to accounts receivable or the credit manager, not sales.
• Ask whether the relationship is still active and when the last invoice was paid.
• Compare answers across the three calls. Consistent days-beyond-terms is a stronger signal than one glowing call and two vague ones.

Independent references are stronger because the applicant did not pick the reviewers. On TradeRepute, each reference has to be backed by documents such as invoices, bills of lading or contracts that show the two companies traded. You can read how verification works and the review standards behind them. Independent evidence does not make a reference perfect. It makes the source harder to stage.

For supplier checks that go beyond payment history, see our guide on how to verify an overseas supplier before you pay a deposit. For buyer-side identity and ownership checks, see verify a foreign buyer.

Step 1: Get a signed credit application first

Do not start reference calls from a chat message or a verbal promise. Get a written application that includes:

• The full legal name, registration or tax number and registered address
• Owners or directors you will screen
• The credit limit and terms requested (for example, $50,000 on net 30)
• Bank details for a bank reference, if you use one
• Three to five trade references with company names, not just personal mobile numbers
• A signed authorization to contact those references and to pull a business credit report where your local rules allow it

Match the legal name on the application to the official register before you call anyone. In the UK, Companies House is free. In other countries, use the local company register. A trading name on a website is not enough. You need the entity that will owe you the money.

Step 2: Screen the company and its owners

Before you spend time on reference calls, run basic sanctions and watchlist checks on the company name, directors and any known parent. Free tools include:

• The US Treasury's OFAC Sanctions List Search
• The US government's Consolidated Screening List

Which lists bind you depends on where you are, where your bank is and the goods involved. Keep a dated record of what you searched. A sanctions match is not a soft credit issue. It can make the sale illegal or leave funds frozen in transit.

Also look for the company's footprint: how long the domain has existed, whether the contact uses a company email and whether public records show liens, judgments or recent name changes. None of that replaces a reference call. It tells you whether the call is worth making.

Step 3: Verify each reference contact yourself

For every reference on the list:

1. Confirm the company exists in the register or on an official site.

2. Find a main switchboard or published accounts-receivable number yourself.

3. Ask for the credit manager or AR supervisor by title.

4. State who you are, which company you represent and that you are checking a trade reference for [applicant legal name].

5. Confirm they actually sell to that company on credit, and roughly since when.

If the only way to reach the "reference" is a personal mobile given by the applicant, treat that as a weak signal. It may still be real. It is easier to fake.

Step 4: Ask a fixed set of questions

Use the same script for every call so you can compare answers. A practical set:

• How long have you extended credit to this company?
• What is your current credit limit, and what is the highest balance they have carried?
• What terms do you give them (net 30, net 60, early-pay discount)?
• What is their average days beyond terms over the last 12 months?
• In the last year, what share of invoices was paid within terms?
• Have you ever placed them on credit hold? When, and why?
• Have they disputed invoices? How were those disputes handled?
• Have order patterns or payment speed changed in the last six months?
• Would you increase their credit limit if they asked tomorrow?
• Is there anything else I should know before offering them similar terms?

Write the answers down while you are on the phone. Note the date, the person's name and title and the number you dialed. Vague praise without numbers ("they're great, no problems") is worth less than a clear days-beyond-terms figure.

Step 5: Weight days beyond terms and relationship length

Days beyond terms (DBT) is often the single most useful number on a reference call. A simple working frame many credit teams use:

• DBT 0–5: Pays within terms or very close. Strong signal if the limit is meaningful.
• DBT 6–15: Slightly slow. Often acceptable with a lower limit or shorter terms until you have your own history.
• DBT 16–30: Regularly about one billing cycle late. Shorten terms or cut the limit until the pattern improves.
• DBT 30+: Chronic late payer with that supplier. Needs a strong reason before you grant open account at all.

Weight by relationship length and size. A five-year account at a $200,000 limit with DBT 4 tells you more than a three-month account at $5,000 with DBT 0. Recent references can miss an older problem. Very old references can miss a recent cash crunch. Aim for a mix: at least one longer relationship and one current one.

Look for consistency across references. Three vendors reporting DBT 5, 8 and 4 tell one story. Three vendors reporting DBT 3, 5 and 42 tell another. Ask the applicant about the outlier before you set a limit.

Step 6: Turn the answers into a written credit decision

References should end in a decision on paper, not a gut feeling in a chat thread. For each new account, write down:

• Approved credit limit (or declined)
• Payment terms (for example, net 30 from invoice date)
• Any security or extras (deposit on first orders, personal guarantee, shorter terms for 90 days, export credit insurance)
• Review date (for example, after three clean cycles or in 90 days)
• Who approved it and on what date

Match the decision to the risk you found:

• Strong: Full requested limit and standard terms, with a review date.
• Moderate: Lower limit, shorter terms or a staged path (prepaid first order, then net 15, then net 30).
• Weak but acceptable: Cash in advance or cash on delivery until you have your own payment history.
• Unacceptable: Decline credit. You can still sell prepaid.

Where competition forces open account, the ITA notes that exporters can reduce non-payment risk with tools such as export credit insurance and other trade-finance techniques described in the Trade Finance Guide. Insurance is not a substitute for knowing who you are selling to. It is a backstop after you have done the checks.

Step 7: Re-check when the exposure grows

A clean reference file from last year does not cover a limit that just doubled. Re-run reference checks, register checks and sanctions screens when:

• The buyer asks for a higher limit or longer terms
• Payment speed slows on your own invoices
• Ownership changes, or the legal name on documents changes
• You open a new corridor or ship a new product line with different compliance rules

Keep one credit file per counterparty: application, register screenshots with dates, sanctions search results, reference call notes, your written decision and later payment performance. The next person on your team should be able to see why the account was approved.

Our counterparty due diligence checklist is a repeatable routine for buyers and suppliers. If the other party is a factory abroad and money would leave before goods arrive, combine this reference work with the deposit checks in vetting an overseas supplier.

Red flags on trade references

Pause before you approve net terms if you see any of these:

• References only reachable through phone numbers or emails the applicant supplied
• The "credit contact" is in sales, or cannot state a credit limit or days-beyond-terms
• All three references are brand-new relationships for a company that claims a long trading history
• One reference reports credit holds or DBT over 30 while the others sound rehearsed
• The legal name on the application does not match the register or the name on the bank details
• The applicant refuses authorization to contact suppliers or to pull a business credit report
• References are personal friends, related companies or landlords rather than trade creditors
• Payment terms requested are far longer than any reference says they grant

None of these proves fraud alone. Each one needs a clear answer before you ship on open account.

How TradeRepute fits this workflow

Applicant-provided calls still matter. They are fast and they show how the company wants to be seen. Independent references fill the gap the applicant cannot fill: reviewers they did not choose, tied to documents that show the trade happened.

When you read a TradeRepute reference, check the year it was written, the type of evidence behind it and whether several references tell the same story. Pair that with your own calls, your register and sanctions checks and a written limit. That is due diligence. It is not a credit rating, and it does not guarantee payment.

Disclaimer

Business-to-business trade references for due-diligence purposes only. Not a credit report, credit rating or legal, financial or investment advice. References are the opinions of verified reviewers. Reviewers are anonymous to the public and the reviewed company. Evidence is reviewed but accuracy is not guaranteed; companies may dispute a reference privately.