Guide
Property management companies quote net 30 but routinely pay at day 45 or day 60. Here's the maths on what that delay locks up in your bank account, and what to charge or negotiate instead.
Ask any tradesperson who works with property management companies and you'll hear the same thing: the contract says net 30, the invoice gets approved on time, and the money still doesn't land until day 45, 50, sometimes 60. This isn't usually bad faith. PMs batch payments to owners' trust accounts, wait for owner sign-off on larger jobs, and run payables through a slow AP cycle. But slow is slow, whatever the reason.
The question isn't really "should I offer net 30". It's "am I pricing and structuring the account so that a 45-60 day reality doesn't quietly bankrupt my cash flow". Here's how to work that out properly.
Every account you invoice on terms ties up working capital while you wait to get paid. The amount tied up isn't the invoice total — it's the average balance sitting out there at any given moment, which depends on how much you bill and how long they take to pay.
The formula:
Cash tied up = (monthly revenue from the account / 30) × average days to pay
This gives you the average amount of your money sitting in someone else's bank account on any given day, once the account has settled into a steady rhythm of billing and payment.
Say you do $6,000 a month in work for one property management company, and they actually pay at day 45 (not the day 30 on the contract).
That $9,000 isn't a one-off. It's permanently locked up as long as you keep working with them on those terms — it's the average float sitting in their accounts payable queue at any point in time. If their payment habit slips to day 60, that figure rises to $12,000. If it improves to a genuine day 30, it drops to $6,000. The delay between "contracted terms" and "actual payment behaviour" is the number that matters, not the number in the agreement.
$9,000 sitting out isn't free. It's money you can't use to buy materials, cover payroll, or avoid drawing on a line of credit. Put a cost of money on it — 15% is a reasonable estimate if you're financing that gap through a business credit line, a factoring arrangement, or simply the opportunity cost of cash you could have deployed elsewhere.
Annual cost = cash tied up × cost of money
$9,000 × 15% = $1,350 a year, just to carry this one account's float.
Against $6,000/month revenue ($72,000/year from this account), that's:
$1,350 / $72,000 = 1.85% of revenue, gone before you've bought a single fitting.
That's the number that should be sitting in your head every time you quote a PM job at the same rate you'd quote a homeowner who pays on the day.
1.85% is the pure cost-of-money hit at day 45 and a 15% cost of capital. In practice you want more headroom than that, because:
Put those together and a 3-5% premium over your retail or direct-to-homeowner rate is a defensible number, not padding. It's the price of being their unofficial bank. Run the numbers through a hourly rate calculator first so you know your baseline rate before you decide how much to load onto it for PM work, and check individual jobs against a job profitability calculator to see if the premium is actually landing on the bottom line once material costs and callbacks are counted.
The rate premium fixes the cost problem. It doesn't fix the risk problem. If one property management company is 40% of your monthly revenue and they stretch to day 70 during a bad quarter, you don't have a pricing problem any more — you have a solvency problem.
Set a hard cap: no single slow-paying account above 20% of monthly revenue.
If a PM account is growing past that, either negotiate faster terms with them specifically, or deliberately keep growing your other revenue streams so the ratio holds. Your break-even calculator is useful here too — model what happens to your break-even point if that one account's payment slips by 15-20 days and see how much runway you actually have.
PMs are used to trade negotiations. Arguing over your hourly rate is a fight you'll mostly lose, because they can point to three other contractors quoting lower. Arguing over payment mechanics is a different conversation, and it's one where you're offering them something too.
| Term | What it does | Why a PM will often agree |
|---|---|---|
| PO up front | No work starts without an approved purchase order number | Protects them from owner disputes over unauthorised work — it's in their interest too |
| 2% net 10 | 2% discount if paid within 10 days, full amount at 30 | Costs them almost nothing if their AP is fast, and it's a standard trade term they'll recognise |
| Work-order cap | Any job over a set dollar amount (say $500-$1,000) triggers a deposit before you start | Limits your exposure on large jobs without you having to police every small callout |
None of these require you to threaten to walk away or demand a rate hike upfront. They're operational terms, and PMs deal with operational terms from every vendor they use. A work-order cap in particular does most of the heavy lifting: it stops a single large job from becoming a large slow-paid receivable, which is exactly the scenario that blew the $9,000 figure up to something worse.
Before you sign on with a property management company, or before you renew with one that's been slow:
Net 30 isn't the enemy. Net 30-on-paper-but-actually-55 without any of these guardrails is. Do the maths once, set the terms, and you can take PM work without quietly funding someone else's accounts payable department.
The Small Business Operations Kit ($19) turns guides like this one into fill-in-once worksheets: rate card, quoting sheet, job costing, payment terms and follow-up templates.