Trade Credit in Construction Supply
Trade credit lets a construction supplier deliver materials now and get paid later, usually 30 days. Here is how it works and where the PPSR can protect the debt.
Definition
Trade credit is when you, the construction supplier, deliver materials now and get paid later. Usually 30 days from invoice or statement.
It funds the gap between buying stock and getting paid for the job. You carry that gap, not the builder.
Why it matters
Trade credit is your money sitting on someone else's site. Every load you drop without payment is an unsecured bet on a builder staying solvent for the next 30 days. If that builder is stretched, your invoice sits at the back of the queue. The bigger your credit limit, the bigger your exposure when a job goes bad. Understanding how the credit works, and where it can be protected, is the difference between a late payment and a write-off.
How it works in practice
You open a trade account for a builder or subcontractor. You set a credit limit and terms, usually net 30 days. They order, you deliver, you invoice. Many suppliers send a monthly statement instead of chasing each docket.
The catch is timing. You pay your own wages, fuel, and stock up front. The builder pays you a month after delivery, sometimes later. Meanwhile the builder is waiting on a progress payment from the owner, and that payment may be weeks away or sitting behind a bank drawdown. The whole chain runs on credit, and you are funding the bottom of it.
If the builder fails, your unpaid invoices make you an unsecured creditor. You line up behind the bank, the tax office, and the workers, and you usually recover cents in the dollar, if anything. The current system leaves you exposed by default, because nobody links your money to the goods you actually supplied or shows you where the payment chain is stuck.
This is why the PPSR comes up so often in supply terms. The Personal Property Securities Register is where a supplier can record a security interest over goods supplied on credit, and a retention of title clause is the contract term that keeps ownership of stock until it is paid for. Done correctly, those two together can change where you rank if a builder fails. Done incorrectly, the interest may not bind. How they apply to your terms is a legal question, so the right move is to have a lawyer set up your credit application and registration rather than to rely on a template.
Common misconceptions
An unpaid invoice gives me a claim over my goods
Not on its own. A supplier generally ranks ahead of other creditors only with a retention of title clause and a properly recorded PPSR interest over the goods. Without those, the debt is unsecured, and how to put them in place is a question for a lawyer.
A signed credit application protects me if the builder goes under
It sets the terms and may name a personal guarantor, but on its own it does not secure the debt. A guarantee is only as strong as the guarantor's assets. The protection people are thinking of comes from a security interest, not from the application form alone.
Net 30 means I get paid in 30 days
It means payment is due in 30 days. Whether it lands on time depends on the builder's cashflow, which depends on a progress payment you cannot see. Stretched builders pay slow, then stop, and you are the last to find out.
When a builder owes you and stops paying, this is a legal matter, not a do-it-yourself one. Speak to a lawyer, your state tribunal, or Legal Aid before you act.