That's pretty neat, a great idea. Except...If your a sub-contractor and you pay when you get paid, most of the time so do they, especially in this economy.
If you have someone else (credit unions) doing your collecting for you and they're not getting paid either (General contractors) then your relationships with them will get spoiled because your too difficult to deal with. Therefor ruining your return business.
I'm a sub and it's just a thought, but I like the idea. If it could be smoothed out I would be interested.

Hmm, I'm not sure I follow your concerns?
If a credit union handles your accounts for you, and pays you the full amount minus a commission for (nearly) every invoice you issue to your customers immediately after you issue the invoices, then you, as a business, have cash in hand sooner in all cases than if you did things the normal way.

If you have people to pay, contracters and the like, they will be paid like clockwork and they will love doing business with you. This isn't like taking a bad account to collections, where you only get the money when collections pries it away from the deadbeat, this is giving a good account a loan, and using the loan yourself (and helping to reduce the number of bad eggs doing business with you in the first place through better pre-screening).

Are you talking about your clients getting frustrated by being held to a higher standard, like that of a credit union/bank, and not wanting to deal with you? For one thing, there would be nothing preventing you from doing business with some clients the old way and some clients the new way. For instance, if you know a particular client well, you can keep your own account for them, net365 or whatever, and then of course you take the risk on that account.

But you shouldn't have to extend every tom dick and harry that courtesy. A huge percentage of random companies you deal with will abuse the credit you lend them. They will also get away with it, since you probably won't degrade their credit record.

So if you cannot personally vouch for someone's credit, and the CU can't professionally do so, then I would say that person is quite a risk. The worst they could do is take their business to your competition, who ends up unintentionally giving them a free service. So who doesn't want to see the competition dragged down by bad clients? :)