What is net 30?

Net 30 appears on quotes, invoices and purchase orders. It is one of the most common ways to sell on credit between businesses, because the buyer gets time to receive and check the goods before paying.

Why net 30 matters

Payment terms are part of the price. A buyer offered net 60 has the use of your money for twice as long as one offered net 30. For the seller, longer terms mean waiting longer for cash and carrying more risk of late or missed payment.

So the term should be agreed before the order, not discovered on the invoice. It belongs next to the price on the quote.

How net 30 works

1. The seller ships the goods and issues an invoice, dated that day.
2. The invoice states "Net 30".
3. The buyer pays the full amount on or before day 30, counting from the invoice date.

Some contracts count from the delivery date or the date the invoice is received, so the invoice should say which. This is a general explanation, not legal or credit advice.

Related payment terms

• Net 15, net 45, net 60: the same idea with a different number of days.
• 2/10 net 30: a 2% discount if paid within 10 days, otherwise the full amount in 30 days. The discount rewards early payment.
• Due on receipt: payment is due as soon as the invoice arrives.
• Cash in advance or pro forma: the buyer pays before the goods ship. See pro forma invoice.
• End of month (EOM): the days are counted from the end of the invoice month.

An example from product sales

Say a packaging supplier ships 10 pallets on 5 March and invoices $6,000 on net 30. The invoice is due on 4 April. If the supplier offers 2/10 net 30, a buyer who pays by 15 March pays $5,880, which is $6,000 less 2%. A buyer who pays on 4 April pays the full $6,000.

A new customer might be offered cash in advance for the first order and net 30 from the second, once the relationship is established.

Related terms

• Credit limit: the most a customer may owe at one time.
• Sales order: the confirmed order the term applies to.
• Letter of credit: a bank-backed way to secure payment on export orders.
• Purchase order: the buyer's order, which often repeats the agreed term.

How PromptLab handles it

In PromptLab, the quote, the sales order on the account and the invoice you create from that order sit together. Record the agreed payment term in a custom field on the account, and write it in the quote's notes, which print on the quote's PDF, so your team and the buyer see the same term. A workflow can create a task for a rep when, for example, a quote changes status.

Frequently asked questions

What does net 30 mean on an invoice?

It means the full amount is due within 30 days of the invoice date. "Net" refers to the amount after any agreed deductions, with no early-payment discount unless one is stated.

What is the difference between net 30 and 2/10 net 30?

Net 30 gives 30 days to pay in full. 2/10 net 30 gives the same 30 days but takes 2% off if the buyer pays within 10 days.

When does the 30 days start?

Usually on the invoice date, but contracts can say delivery date or the date the invoice is received. Put it in writing on the quote and invoice.

Is net 30 good for the seller?

It helps win orders because buyers like the time, but the seller waits for cash and carries credit risk. Many sellers use it only for customers they have vetted, and ask for payment up front from new ones.

Can I charge interest on late payments?

That depends on your contract and local law. If you intend to, state it in the terms agreed before the sale, and check the rules where you trade.