A new contractor without a supplier credit account must pay for delivered materials before delivery. Which option reflects this requirement?

A new contractor without a supplier credit account must pay for delivered materials before delivery. Which option reflects this requirement?

• A. On delivery
• B. Before delivery
• C. After delivery at 30 days
• D. With a deposit

Answer: (B)

When a contractor hasn’t established a credit account with a supplier, the seller hasn’t extended credit to them. To protect the seller from the risk of nonpayment, the materials must be paid for before they are released or shipped. That’s why the correct approach is to pay prior to delivery. Terms like paying on delivery would still involve the supplier extending credit at the moment of shipment, which isn’t available to someone without a credit account. Net-30 or other post-delivery terms also require an approved credit relationship, which isn’t present here. A deposit could be part of the arrangement, but the specific requirement described is full payment before delivery, so pre-delivery payment best reflects the scenario.

When a contractor hasn’t established a credit account with a supplier, the seller hasn’t extended credit to them. To protect the seller from the risk of nonpayment, the materials must be paid for before they are released or shipped. That’s why the correct approach is to pay prior to delivery. Terms like paying on delivery would still involve the supplier extending credit at the moment of shipment, which isn’t available to someone without a credit account. Net-30 or other post-delivery terms also require an approved credit relationship, which isn’t present here. A deposit could be part of the arrangement, but the specific requirement described is full payment before delivery, so pre-delivery payment best reflects the scenario.