Net terms
Net terms specify the number of days a buyer has to pay an invoice in full, counted from invoice date. Net 30 means payment is due within 30 days; Net 60 allows 60 days. These standard payment windows provide buyers time for invoice processing while giving suppliers predictable payment timing.
Examples
Net 30: The most common payment term in many industries. An invoice dated January 15 under Net 30 terms is due by February 14. Payment within this window fulfills the buyer's obligation.
Net 60: Extended payment terms sometimes negotiated by larger buyers or common in certain industries. An invoice dated January 15 is due by March 16, giving the buyer an additional month of cash flow.
Net 45: A middle ground between Net 30 and Net 60, sometimes used when buyers want extended terms but suppliers resist full 60-day exposure.
Definition
Net terms define the payment window but don't specify payment method or other conditions. The "net" refers to the full amount due without discount, distinguishing from terms that include early payment discounts.
Buyers generally seek longer net terms to preserve cash and reduce working capital requirements. Each additional day of payment delay represents financing that suppliers implicitly provide. The cost of this financing affects supplier pricing and willingness.
Suppliers accept extended terms to win or retain business, but long terms increase their working capital needs and credit exposure. Small suppliers may struggle with long terms more than large ones who can absorb the delay or access financing.
Net term starting point matters. "Net 30 from invoice date" differs from "Net 30 from receipt of goods" or "Net 30 from end of month." The starting point can significantly affect actual payment timing.
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