How Electricians Can Buy Materials Before Getting Paid (NZ)
Electricians usually bridge the gap between paying for materials and getting paid by managing timing first: order in stages, send payment claims on time, ask the wholesaler to split or extend a big invoice, and get a deposit for long lead items. If a gap is still left, funding the wholesaler invoice is one option.
Why the Gap Exists
The wholesaler's clock and the client's clock run separately. A merchant account is often due on the 20th of the month following, as explained in what payable on the 20th of the month following means. Meanwhile, under section 18 of the Construction Contracts Act 2002, a payment becomes due 20 working days after a payment claim is served. Working days leave out weekends, public holidays and, for this purpose, 24 December to 5 January. Most commercial and subcontract jobs follow this, but some rules differ for residential owner contracts, so check yours.
Illustrative timeline (2026 calendar): an electrical contractor on a commercial fit-out buys $18,000 of switchboard and cable for a stage of the job.
| Date | What happens |
|---|---|
| 10 July | Materials delivered to site and invoiced by the wholesaler |
| 20 August | Wholesaler's account is due (20th of the month following) |
| 31 August | The stage finishes and the payment claim is served on the main contractor |
| 28 September | Payment due, 20 working days after the claim was served |
| Gap | 39 days between paying the wholesaler and being paid |
Retentions held back by the main contractor can push part of the money later again. On commercial construction contracts, retention money withheld must be held on trust (section 18C), so ask where it is held and when it is released.
Five Ways to Bridge the Gap Without Borrowing
- 1. Send claims on time and complete. Serve payment claims as often as your contract allows, and include everything the contract lets you claim for, such as materials, if it allows that. A late claim moves the whole payment date.
- 2. Order in stages. Don't take delivery of the whole job's materials at the start. Call off by stage so each wholesaler invoice lines up with the claim it will be paid from.
- 3. Ask the wholesaler to split or extend. Contact the credit team before the due date with a specific plan. See how to negotiate longer payment terms with suppliers, and avoid being put on stop. See what an account on stop means.
- 4. Ask for a deposit on long lead items. Switchboards, commercial lighting and solar equipment can be ordered months ahead. Build a deposit or materials payment into the quote and agree it in writing.
- 5. Chase late payers fast. A payment schedule and a clear follow up routine protect your cash. See what to do when a customer doesn't pay and whether you can charge interest on an overdue invoice.
When Funding the Materials Invoice Makes Sense
If you have done all five and a gap is still left, funding the wholesaler's invoice is one way to cover it. Compare the total dollar cost of each option over the weeks you need it. An overdraft with room in it, or a wholesaler willing to extend you, is usually cheaper. The dollar cost comparison for a large supplier invoice sets the options side by side.
PaidTerms works on a real invoice from an NZ supplier. You apply with the wholesaler invoice and we review it. If you're approved, PaidTerms pays the supplier in full and you repay in 3 or 6 monthly instalments, with the first instalment paid at the start. Fees start from 3.95%, which on an $18,000 invoice is $711 for three instalments, and the fee for your term is shown before you confirm. See pricing.
To be clear about what this is: it funds a specific supplier invoice. It isn't a loan, an overdraft or finance against your progress claims, and it doesn't cover overseas suppliers. If you're financing a van or tools you'll keep, that is asset finance, a different product.
More for trades: building materials finance for NZ builders, the Stock Finance guide, the Cash Flow guide and electrical and lighting suppliers in the directory. This article is general information, not legal or financial advice.
Frequently Asked Questions
How do electricians pay for materials before the client pays?
Most manage timing first: staged orders, prompt payment claims, a split or extension from the wholesaler, and a deposit for long lead items. If a gap is left, an electrician can fund the wholesaler invoice with an overdraft, a card or instalment funding, and should compare the total dollar cost of each.
When does a client have to pay a payment claim under the Construction Contracts Act?
Under section 18 of the Construction Contracts Act 2002, a payment becomes due 20 working days after a payment claim is served. Working days leave out weekends, public holidays and the period from 24 December to 5 January. Check your contract and get advice if a claim is disputed.
What is retention money on an electrical job?
It is an amount a main contractor holds back from payments until the job or defects period is finished. On commercial construction contracts, retention money withheld must be held on trust under the Construction Contracts Act 2002, so ask where it is held and when it will be released.
Can I ask my client for a deposit for materials?
You can ask, and for switchboards, solar equipment and other long lead items it is worth building a deposit or materials payment into the quote. Whether you can claim one depends on your contract, so agree it in writing before ordering.
Can an electrical wholesaler give me more time to pay?
Often, if you ask before the due date and offer a specific plan, such as half on the 20th and half a month later. Wholesalers are less willing once an account is overdue or on stop, so contact the credit team early.
