Net Terms
Net terms are pay-later invoice terms like net 30, the standard credit arrangement of B2B trade.
What net terms are
Net terms are pay-later payment terms on business invoices: net 30, net 60, net 90, the number being days the buyer has to pay after the invoice date.
Why net terms matter
They’re the standard credit of B2B trade: buyers preserve cash and buy more freely, sellers who extend terms win accounts that cash-up-front sellers can’t. The cost is carrying the receivable and the risk of late or never.
How sellers manage terms
- Credit checks and limits per account before extending
- Early-payment discounts, like 2/10 net 30
- Invoice factoring or terms platforms to offload the wait
- Collections discipline: terms are a loan, run it like one
Frequently asked questions
What does 2/10 net 30 mean?
Two percent off if paid within ten days, full amount due in thirty. The discount buys the seller faster cash; buyers with cash usually take it.
Should a small brand offer net terms?
To win wholesale accounts, often unavoidable: start with tighter limits, shorter terms, and part-prepayment for new accounts, loosening as payment history builds. Terms platforms can take the credit risk for a fee.