Net payment terms tell a buyer how long they have to pay an invoice after it's issued. Net 30 means the full amount is due within 30 days; Net 60, Net 90, and Net 120 extend that window to 60, 90, or 120 days. They're one of the most common ways businesses buy now and pay later — but the longer the term, the harder it is on the seller's cash flow.
What "Net" means on an invoice
"Net" refers to the total amount owed (after any discounts), and the number is how many days the buyer has to pay it. An invoice marked Net 30 dated June 1 is due by July 1. Terms are set by the seller and agreed up front, often in the contract or on the invoice itself.
You'll also see combined terms like 2/10 Net 30 — a 2% discount if the buyer pays within 10 days, otherwise the full amount is due in 30. These early-payment discounts are a common way for sellers to pull cash in faster.
Net 30, 60, 90 & 120 explained
- Net 30 — payment due in 30 days. The most common B2B term and a fair balance: it gives the buyer flexibility while keeping the seller's cash cycle short.
- Net 60 — 60 days to pay. Common with larger buyers and retailers who use their size to negotiate longer terms.
- Net 90 — 90 days. Typical in manufacturing, wholesale, and with big-box or government buyers who set their own terms.
- Net 120 — 120 days. Rare and demanding; usually only large, powerful buyers can push for it, and it puts real strain on suppliers.
| Term | Days to pay | Common use | Impact on seller |
|---|---|---|---|
| Net 30 | 30 | Standard B2B | Manageable |
| Net 60 | 60 | Larger buyers | Moderate cash gap |
| Net 90 | 90 | Wholesale / retail / gov | Significant gap |
| Net 120 | 120 | Large enterprise buyers | Heavy strain |
A quick example: the cash gap long terms create
Say you deliver a $50,000 order on Net 90. You've already paid your own suppliers, staff, and shipping to fulfil it — but you won't see that $50,000 for three months. If your suppliers are on Net 30, you're financing a 60-day gap out of your own pocket on every single order.
Now multiply that across a growing order book. The faster you grow on long terms, the more cash gets locked up in unpaid invoices — which is how a profitable business can still run short of cash.
Pros and cons
For the buyer, longer terms are a clear win: they hold onto cash longer and can often sell the goods before the bill is due. For the seller, it's the opposite — you've delivered but won't be paid for weeks or months, while your own bills keep coming.
Offering longer terms can win and keep bigger customers, but only if you can afford to carry the gap.
When to offer each term
- Net 15–30 — new customers, small orders, or when your own cash cycle is tight.
- Net 60 — established, reliable customers, or to compete for larger accounts.
- Net 90+ — big buyers where the relationship is worth the wait, and where you can cover (or finance) the gap.
Match the term to the customer's risk and the size of the relationship — not just what they ask for.
How to protect yourself when offering net terms
- Run a credit check before extending terms to a new buyer.
- Ask for a deposit on large or first-time orders.
- Put terms in writing, including late-payment fees for overdue invoices.
- Offer an early-payment discount (like 2/10 Net 30) to encourage faster payment.
- Track receivables closely so you catch slow payers early.
How to offer long terms without the cash crunch
You don't have to choose between winning the customer and protecting your cash. Financing bridges the gap:
- Invoice financing — get paid upfront on your Net 30/60/90 invoices instead of waiting the full term.
- Vendor / payable financing — a provider pays your supplier now and you repay over 30–90 days.
- Purchase order financing — fund the order itself when you're waiting on a large buyer.
The result: you can offer the payment terms your customers want and keep cash moving at the same time.
Common mistakes to avoid with net terms
- Offering long terms to every customer. Reserve Net 60-90 for buyers who have earned it; keep new or risky accounts on shorter terms.
- Not enforcing due dates. Terms mean nothing without follow-up - send reminders before and after the due date, and apply late fees when you have agreed them.
- Ignoring the cash gap. If you sell on Net 90 but pay suppliers on Net 30, plan for that 60-day gap up front rather than discovering it when cash runs low.
- Skipping credit checks. The longer the term, the more you are effectively lending - confirm a buyer can pay before you extend it.
- Confusing "Net 30" with "30 days from delivery." Spell out exactly when the clock starts in your contract to avoid disputes.
Getting these right keeps net terms a growth tool instead of a cash-flow trap.
FAQ
What does Net 30 mean? Payment is due in full within 30 days of the invoice date.
Is Net 30 from the invoice date or delivery date? Usually the invoice date, unless the contract specifies receipt of goods.
What's the difference between Net 60 and Net 90? Just the number of days to pay — 60 vs 90. Longer terms favor the buyer and strain the seller's cash flow more.
Are longer net terms bad for my business? Not if you can cover the cash gap. If long terms leave you short, invoice or vendor financing can bridge it.
Can I get paid before my Net 90 invoice is due? Yes — invoice financing advances the cash so you don't wait the full term.
Want to offer longer terms without the wait? See if you qualify for Drip Capital →
