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Glossary
Net 30 Payment Terms
Net 30 Payment Terms give a buyer 30 calendar days from an agreed start date, usually the invoice date, to pay an invoice in full with no early-payment discount. Sellers offer the arrangement as trade credit: goods or service ship first, and cash settles about a month later.
Key Takeaways
Net 30 counts calendar days, not business days, so a term can stretch to 32.
The start date is contractual: invoice date, ship date, delivery date, and invoice receipt are all used.
FAR 52.232-25 sets the US federal standard at the 30th day after a proper invoice arrives.
Net 30 EOM isn't Net 30. The clock starts at month end, so an invoice dated the 2nd settles nearly 60 days out.
A 2/10 Net 30 discount costs the seller 37.2% annualized, calculated as (2 / 98) x (365 / 20).
Atradius puts 43% of credit-based US B2B sales overdue, so Net 30 is a target, not a collection date.
When does the Net 30 clock actually start?
The clock starts on whatever date the contract names, and the invoice date is only the most common choice. Most disputes I've seen over "late" payment come down to two parties counting from different days.
These start dates show up in real contracts:
Invoice date. Standard for SaaS and services, and the easiest to automate.
Invoice receipt date. When the buyer's billing office receives a proper invoice. The FAR 52.232-25 federal standard, copied by large buyers.
Ship date. The day goods leave the seller, which favors the seller since invoices lag shipment.
Delivery or acceptance date. The day the buyer signs off. Common in hardware, and it adds weeks.
End of month. The Net 30 EOM variant, counting from the invoice month's last day.
Net 30 counts calendar days unless the contract says business days, and a weekend due date usually rolls forward. Print that date on the invoice. If you generate invoices programmatically, resolve it at draft invoice stage so the buyer and your dunning sequence use the same number.
How does Net 30 compare to the other common terms?
Net 30 sits mid-ladder, and each step trades collection speed against how the terms look to a buyer.
Term | Full payment due | Discount | Where it fits |
|---|---|---|---|
Net 15 | 15 days from invoice date | None | New accounts, small balances |
Net 30 | 30 days from invoice date | None | Default US and UK B2B term |
Net 45 | 45 days from invoice date | None | Mid-market, near the US average |
Net 60 | 60 days from invoice date | None | Buyers with negotiating power |
Net 30 EOM | 30 days after the invoice month ends | None | Monthly payment batches |
2/10 Net 30 | 30 days, or 10 days at 2% off | 2% by day 10 | Sellers wanting cash sooner |
Two rows deserve a closer read. Net 30 EOM behaves like Net 45 on average, and like Net 60 for anything invoiced early in the month. 2/10 Net 30 isn't a softer Net 30 either: the seller sells a 2% haircut for 20 days of cash. Atradius puts average US terms at 45 days, so Net 30 runs tighter than the market.
What does offering Net 30 cost the seller?
Net 30 costs you 30 days of working capital on every invoice, plus whatever slippage customers add. That cost is real even when everyone pays on time, because earned revenue sits as unbilled AR instead of cash.
Price the discount variant first:
(discount % / (100 - discount %)) x (365 / (net days - discount days))
(2 / 98) x (365 / 20) = 0.020408 x 18.25 = 0.3724
That's 37.2% annualized. Borrow below 37% and the discount is a bad trade. Factor receivables at 40% or more and it's a good one.
The rest of the cost sits in collections:
Default risk. Every Net 30 invoice is unsecured credit, and Atradius puts 43% of credit-based US B2B sales overdue.
Collections effort. Late invoices need reminders, escalation, sometimes a stop-ship.
Reconciliation drag. Partial payments and remittances missing an invoice number land in payment reconciliation.
Silent write-offs. Small balances nobody chases become revenue leakage, not a bad debt entry.
Related terms
These entries cover the mechanics around a Net 30 invoice:
Net 30 usually rides on billing in arrears, invoiced after delivery.
The due date gets stamped at draft invoice stage.
Dunning management starts the day payment goes past due.
Payment reconciliation matches cash to the invoice.
Unbilled AR covers revenue earned but not invoiced.
FAQ
What does 2/10 Net 30 mean?
2/10 Net 30 means the buyer takes 2% off by paying within 10 days, and otherwise owes the full amount on day 30. The seller pays 37.2% annualized for those 20 days, so it works only when cash is tighter than that rate.
Is Net 30 counted in business days or calendar days?
Net 30 counts calendar days by default, weekends and holidays included. If you want business days, the contract has to say so explicitly.
Can a seller charge a late fee on a Net 30 invoice?
A seller can charge a late fee only if the contract or invoice states the rate up front. Retroactive fees don't hold up. Common practice runs 1% to 1.5% per month, and some jurisdictions cap it.
What's the difference between Net 30 and Net 30 EOM?
Net 30 counts from the invoice date, Net 30 EOM from the last day of the invoice month. An invoice dated 3 March is due 2 April under Net 30, and 30 April under EOM: 58 days of credit instead of 30.
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