Momentum’s Payment Terms Strategy: When Net 120 Beats Traditional Marketing Spend

Momentum’s Payment Terms Strategy: When Net 120 Beats Traditional Marketing Spend

Most B2B companies view payment terms as a necessary evil—something finance negotiates and sales grudgingly accepts. Preston Bryant weaponized them as his primary customer acquisition strategy.

In a recent episode of Category Visionaries, Preston Bryant, Founder and CEO of Momentum, revealed how offering net 120 payment terms—four months of float—became the competitive advantage that drove his recycling marketplace past $150 million in transactions. The insight: when you align payment terms with customer cash conversion cycles instead of vendor preferences, the cost of capital becomes your most effective marketing spend.

The Standard Playbook Nobody Questions

B2B payment terms follow predictable patterns. Net 30 is standard. Net 60 is generous. Net 90 is reserved for enterprise customers with serious negotiating leverage. Anything beyond that seems financially irresponsible—CFOs get nervous, investors ask questions, and finance teams calculate the working capital strain.

This orthodoxy exists because most companies think about payment terms from their own cash flow perspective, not their customer’s operational reality. The question is always “how quickly can we get paid?” rather than “when does our customer actually have cash to pay us?”

Preston inverted the entire framework. Instead of asking what terms Momentum could afford, he asked what terms would eliminate friction from the customer’s buying decision. The answer shocked most people who hear it.

“We offer net 120 day payment terms to some of our larger customers,” Preston explains. Four months. Sixteen weeks. A full business quarter of float.

Understanding Customer Cash Conversion Cycles

The genius of Preston’s approach becomes clear when you map the actual cash flow timeline for Momentum’s customers.

“They’re collecting and sorting and baling material. They’re putting it into an intermodal container or into the back of a truck, shipping it to us. That’s like a 60 day process. And then once we get it, we have to process it, we have to sort it, we have to sell it. That’s another 30 to 60 days,” Preston shares.

This isn’t theory—it’s the operational reality of recycling operations. Customers spend two months collecting, sorting, and preparing materials. Then Momentum spends another one to two months processing and selling those materials. Only after the entire cycle completes does cash actually materialize.

Standard net 30 or net 60 terms don’t align with this reality—they conflict with it. A customer who receives an invoice on net 60 terms has to pay Momentum before Momentum has even finished processing and selling the material. The customer is financing Momentum’s operations with their working capital.

Net 120 terms flip this dynamic. By the time payment is due, the entire cash conversion cycle has completed. The customer isn’t financing Momentum—they’re paying from proceeds of materials already sold.

Payment Terms as Customer Acquisition Cost

Most B2B founders think about customer acquisition cost in terms of sales and marketing spend: advertising, SDR salaries, marketing programs, sales commissions. These are real costs with measurable returns.

Preston recognized that extended payment terms are also customer acquisition costs—just accounted differently. The cost of capital for four months of float is real money. But it solves a customer problem that traditional marketing spend cannot: it eliminates financial friction from the buying decision.

“If you’re offering net 60 terms and free shipping and really easy online checkout and really good customer service, it’s just really hard for people not to switch,” Preston explains.

The calculation becomes clear when you compare alternatives. Momentum could spend $50,000 on advertising to acquire a customer. Or they could offer extended payment terms that cost $5,000 in working capital financing but remove the primary objection preventing the customer from switching.

The extended terms don’t just reduce acquisition cost—they improve customer quality. Customers who switch primarily because of payment terms tend to be operationally sophisticated companies that understand cash flow management. These are exactly the customers Momentum wants: high volume, long-term, financially stable.

The Infrastructure Advantage

Offering net 120 terms at scale requires more than risk tolerance—it requires operational capabilities that most marketplaces lack.

Because Momentum owns processing facilities and controls the supply chain, they can manage working capital more efficiently than pure platform businesses. “We built out all the logistics infrastructure, all the processing infrastructure. We have locations in like 30 different states across the country,” Preston notes.

This infrastructure creates several advantages that make extended terms viable. First, owning processing operations means Momentum captures margin across the value chain, not just marketplace transaction fees. This improves unit economics enough to absorb financing costs.

Second, controlling the physical flow of materials provides better visibility into when cash will actually materialize. Momentum knows processing timelines, selling cycles, and payment patterns because they own the operations. This reduces uncertainty around working capital planning.

Third, the infrastructure itself can be financed. Physical assets support debt financing in ways that pure technology platforms cannot. This allows Momentum to finance working capital at lower rates than purely equity-funded competitors.

The Competitive Moat

Extended payment terms create asymmetric competitive advantage because they’re structurally difficult for competitors to replicate.

Pure marketplace platforms that don’t own infrastructure can’t profitably offer net 120 terms. They’re dependent on supplier payment timelines and lack the unit economics to absorb financing costs. Matching Momentum’s terms would destroy their margins.

Traditional recyclers with physical infrastructure could theoretically match the terms but lack the operational efficiency and technology to make it profitable. They’re stuck with legacy cost structures that prevent aggressive payment term strategies.

Momentum operates in the sweet spot: infrastructure ownership that enables the terms, combined with technology efficiency that makes them profitable. Competitors would need to replicate both advantages simultaneously—a multi-year, capital-intensive undertaking.

The terms also create natural customer retention. Once a customer adjusts their operations around net 120 payment cycles, switching to a competitor with standard terms means disrupting their entire cash flow planning. The friction of leaving compounds over time.

When Extended Terms Make Strategic Sense

Preston’s payment terms strategy isn’t universally applicable. The conditions that make it work are specific, and violating them leads to disaster.

First, customer cash conversion cycles must be genuinely long. If customers have cash available immediately after purchase, extended terms are just giving away working capital for no strategic benefit.

Second, the cost of financing must be lower than alternative customer acquisition costs. If CAC through traditional marketing is $1,000 and financing costs for extended terms are $5,000, the math doesn’t work.

Third, you need operational control that provides visibility into when cash will materialize. Offering extended terms without understanding customer cash cycles creates working capital chaos.

Fourth, the market must have high switching costs or relationship inertia. If customers can easily switch between vendors, extended terms won’t create retention value.

Fifth, customer creditworthiness must be verifiable. Extending terms to financially unstable customers doesn’t improve CAC—it increases bad debt.

The Compounding Effect

Payment terms advantages compound in ways that traditional marketing advantages don’t. Once Momentum establishes net 120 as their standard offering, every sales conversation starts from a position of competitive superiority.

Sales cycles shorten because the primary financial objection is pre-solved. Customers don’t need elaborate internal approvals to justify switching—the payment terms make it financially neutral or positive.

Word-of-mouth referrals increase because payment terms are concrete, memorable advantages that customers actively discuss with peers. “They offer net 120” is a clear, actionable recommendation in a way that “they have good customer service” is not.

The terms also create natural expansion opportunities. Customers who experience the cash flow benefits of net 120 terms on initial purchases are predisposed to increase volumes rather than split business across multiple vendors with different payment terms.

What Sophisticated Founders Can Learn

Preston’s payment terms strategy reveals several principles that transfer across industries and business models.

First, map your customer’s actual cash conversion cycle, not their invoice processing timeline. The gap between these two timelines is where opportunity lives.

Second, treat working capital investment as customer acquisition cost. Run the same ROI analysis on financing costs that you run on marketing spend.

Third, understand that some competitive advantages come from absorbing costs that competitors cannot profitably bear. The willingness to finance customer cash cycles can be more defensible than product features.

Fourth, payment terms create switching costs that compound over time. A customer whose operations are built around your payment structure faces real friction in switching to competitors.

Fifth, infrastructure ownership enables financial strategies that pure platform businesses cannot execute. Sometimes the best fintech innovation comes from owning physical operations.

The Counterintuitive Truth

Most B2B founders optimize payment terms for their own cash flow. Preston optimized for customer cash flow and built a business that’s harder to compete against as a result.

The four months of float that seems financially reckless is actually strategic genius. It eliminates the primary friction point preventing customers from switching, creates retention through operational integration, and costs less than traditional customer acquisition.

For B2B founders evaluating competitive positioning, Preston’s playbook offers a clear lesson: sometimes the best marketing spend isn’t advertising or content or sales headcount. Sometimes it’s the willingness to align your cash needs with your customer’s cash reality—and use working capital as a weapon that competitors can’t match.

The companies that win aren’t always the ones with the best products or the slickest marketing. Sometimes they’re the ones that make it easiest for customers to say yes—and payment terms are often the overlooked lever that makes yes inevitable.