Payment expected immediately upon receiving the invoice, typically within 1-5 days.

Full payment due within 10 days from the invoice date.

Payment due within 15 days from the invoice date.

Payment due within 45 days from the invoice date. Extended terms for enterprise customers.

Payment due within 60 days from the invoice date. Extended terms requiring strong cash reserves.

Payment due within 90 days. Rare except in specific industries or situations.

2% discount if paid within 10 days, otherwise full amount due in 30 days. Can use other combinations like 1/10 Net 30 or 3/15 Net 45.

What are invoice payment terms?

Invoice payment terms define when and how customers must pay for goods or services. They specify the due date (e.g., Net 30 means payment due within 30 days), early payment discounts if applicable (e.g., 2/10 Net 30 offers 2% discount if paid within 10 days), accepted payment methods, and consequences for late payment. Clear payment terms reduce confusion, accelerate payment, and provide legal protection if you need to pursue collections.

What does Net 30 mean on an invoice?

Net 30 means the full invoice amount is due within 30 days from the invoice date. No discount is offered for early payment. For example, an invoice dated January 1st with Net 30 terms is due by January 31st. This is the most common payment term in B2B transactions, balancing seller cash flow needs with buyer payment processing time. Some companies interpret Net 30 as 30 days from receipt rather than invoice date, so clarify this with new customers.

What is the difference between Net 30 and Due on Receipt?

Net 30 gives customers 30 days to pay after the invoice date. Due on Receipt (also called "Immediate" or "Due Upon Receipt") means payment is expected immediately when the customer receives the invoice—typically within 1-5 days. Due on Receipt is used for small amounts, customers with poor payment history, or when you need immediate cash flow. Net 30 is more customer-friendly and standard for B2B relationships.

What does 2/10 Net 30 mean?

2/10 Net 30 offers a 2% discount if paid within 10 days, otherwise the full amount is due within 30 days. Example: $10,000 invoice with 2/10 Net 30 terms—pay $9,800 by day 10 (saving $200), or pay $10,000 by day 30. This incentivizes early payment, improving your cash flow. From the customer's perspective, taking the 2% discount is equivalent to earning 36.7% annual return, making it almost always financially smart to pay early.

How do I choose the right payment terms for my business?

Consider these factors: (1) Industry standards—B2B typically uses Net 30-60, retail often requires immediate payment. (2) Your cash flow needs—tighter cash flow requires shorter terms. (3) Customer creditworthiness—new or risky customers get shorter terms or prepayment. (4) Invoice size—larger amounts may justify longer terms. (5) Competitive positioning—flexible terms can win business. Start with industry standards and adjust based on experience with specific customers.

Can I change payment terms for existing customers?

Yes, but communicate changes proactively with at least 30 days notice. Valid reasons include: consistent late payments (shorten terms), excellent payment history (extend terms as reward), changed business circumstances, or industry norm shifts. Send a formal notification explaining the change and effective date. For customers with contracts, wait until renewal unless the contract allows unilateral changes. Frame changes positively—"updating our payment policies to better serve customers" rather than punitive language.

What happens if a customer pays late?

Your invoice should specify late payment consequences: (1) Grace period (typically 5-10 days) before penalties. (2) Late fees (e.g., $25 or 1.5% monthly interest on overdue balance). (3) After 60 days overdue, send formal demand letter. (4) After 90 days, consider collections agency or legal action for amounts over $1,000. (5) For business customers, report to commercial credit bureaus. Always document communication and follow your stated policies consistently to maintain legal standing.

Should I offer early payment discounts?

Offer early payment discounts if you need faster cash flow and can afford the discount cost. A 2% discount for payment within 10 days (instead of 30) costs you 2% but can improve cash flow by 20 days. This makes sense if: (1) You have high-interest debt (discount is cheaper than interest). (2) You have growth opportunities requiring immediate cash. (3) You want to reduce accounts receivable management costs. Don't offer if you have strong cash reserves and customers already pay promptly. Typical discounts: 1-2% for payment 10-20 days early.