Net 30 means the full invoice is due 30 days after the invoice date. "Net" is the amount owed, and 30 is the number of days. So an invoice dated June 1 on net 30 terms is due July 1. There is no discount for paying early and, unless your terms say so, no penalty until the 31st day. For a small seller, the catch is not the word. It's that you've delivered the work and paid your own costs, and you wait a month to be repaid.
Net 30 in one sentence
Net 30 is a standard credit term between businesses. The seller delivers first and invoices; the buyer pays within 30 days. The clock starts on the invoice date, not the delivery date and not the date the customer opens the email. That is why sending the invoice the same day as the work matters: every day you wait to send is a day added to your wait.
Net 30 compared with net 15, net 45 and due on receipt
| Term | Due | Who usually asks for it |
|---|---|---|
| Due on receipt | Immediately | Sellers of small jobs and consumers |
| Net 15 | 15 days | Small sellers who need quicker cash |
| Net 30 | 30 days | Most business buyers, by default |
| Net 45 | 45 days | Larger companies and some distributors |
The longer the term, the more of your money sits in someone else's account. Terms are negotiable. They're written in the quote or the agreement, and a buyer can only hold you to the ones you accepted.
What 2/10 net 30 means
"2/10 net 30" reads as: take 2 percent off if you pay within 10 days; otherwise the full amount is due in 30. On a $3,000 invoice, paying by day 10 means $2,940, a $60 discount. The seller gets cash 20 days earlier for 2 percent, which works out to roughly 37 percent annualized if you compare it to borrowing. That's a high price for money. It can make sense if the alternative is a credit card at 25 percent, or no way to make payroll. It doesn't if your cash is fine.
The cash-flow cost, with numbers
Take Dale, who runs a three-person sign shop. He sells a $3,000 job to a business customer on net 30. His costs on the job are materials of $1,100 and two employees' wages of $900, paid within the first week. He pays his own supplier on 14-day terms.
- Day 0: job delivered and invoice sent. Dale has already spent $2,000 of his own money.
- Day 14: his supplier bill for $1,100 is due. The customer hasn't paid.
- Day 30: the customer pays $3,000.
For 16 days (day 14 to day 30), Dale is financing $1,100 out of his own account. If he does this on 8 jobs a month, he is carrying around $8,800 that belongs to customers. If he covers the gap with a business line at 12 percent a year, the interest on $1,100 for 16 days is about $5.80 per job. That seems small. The bigger cost is the risk and the cap on growth: he can't take the ninth job if the first eight haven't paid.
Who asks for net 30 and why
Larger companies and government buyers often have accounts payable systems that run on set cycles, so net 30 or longer is their default. Some buyers ask for net 30 because it is the standard, not because they need it. It's reasonable to ask: "Our standard terms for new customers are net 15, or 50 percent up front and the rest on completion." Plenty accept.
How to refuse it, or shorten it
You have four options when a customer asks for net 30 and you can't carry it.
- Ask for a deposit (see deposits for appointments), so you're not financing the whole job.
- Offer net 15 and a 2 percent discount for paying within 10 days.
- Split the invoice: half at the start, half at delivery.
- Accept net 30 for customers with a history of paying, and refuse for new ones until they've paid twice on time.
Whatever you choose, put it in the quote and invoice, and add the late fee, if any. Our late payment fees guide compares options. For wording of the follow-up, read how to follow up on an unpaid invoice, send the invoice quickly with how to send an invoice, and see how to get paid faster. The time lost in invoicing alone is in the four hours nobody invoices for.
Other terms on the same invoice
- Net 60 and net 90: the same idea at 60 and 90 days, common in large-company procurement.
- EOM (end of month): due at the end of the month in which the invoice is dated, plus any days stated.
- Due on receipt: payable when the invoice arrives.
- Accounts receivable: the money customers owe you; net 30 turns a sale into a receivable for a month.
- Early-payment discount: a percentage off for paying early, as in 2/10.
Payment terms come after the sale, and the sale starts with a conversation. Rocketship finds the buyers, emails them from your own Gmail, follows up, and books the meeting on its own. Plans that get you customers start at $24.99 a month (Launch), and both Launch and Frontier start with a 7-day free trial, card required. For the card side of getting paid, see what accepting cards really costs and a service agreement template.