Net 30 payment terms: what they mean
"Net 30" on an invoice means the full amount is due 30 days after the invoice date. It's the most common payment term in business-to-business work, but it isn't always the best one for a small business.
The common terms
| Term | Payment is due |
|---|---|
| Due on receipt | As soon as the customer receives the invoice |
| Net 7 / Net 15 | 7 or 15 days after the invoice date |
| Net 30 | 30 days after the invoice date |
| Net 60 / Net 90 | 60 or 90 days after the invoice date (common with large companies) |
| 2/10 Net 30 | Full amount in 30 days, or take 2% off if paid within 10 days |
| End of month (EOM) | By the end of the month the invoice is dated |
| 50% upfront | Half before work starts, the rest on completion |
"Net" means the full amount after any discounts or credits already agreed.
Choosing your terms
Shorter terms get you paid sooner. Customers tend to pay close to the due date, whatever it is. If most of your customers are small businesses or consumers, Net 15 or due on receipt is perfectly normal and shortens the time you're waiting for money.
Match what your customers expect. Larger companies often have fixed payment runs and may insist on Net 30 or longer. It's better to agree Net 45 upfront than to accept Net 30 and chase every invoice at day 31.
Use deposits for big jobs. For projects where you pay for materials or labor upfront, ask for a deposit or progress payments rather than one large invoice at the end.
Early payment discounts cost more than they look. 2/10 Net 30 means giving up 2% to be paid 20 days sooner. That's a very high annual rate, so use it only if faster cash is worth that much to you.
Making terms stick
- Put the terms on the quote or contract, not just the invoice, so they're agreed before work starts.
- Show the due date as a date, not just "Net 30". "Due March 14" is harder to misread.
- Invoice promptly. The clock starts on the invoice date; an invoice sent two weeks late is two weeks of free credit.
- Follow up the day after it's due. A reminder the day after the due date is routine. One sent a month later reads as a complaint, and the invoice is harder to collect. Our free reminder templates cover each stage.
- Consider a late fee, stated upfront. See late payment fee wording.
Setting default terms in QuickBooks Online
- Click the gear icon, then Account and settings.
- Open the Sales tab and edit Sales form content.
- Set Preferred invoice terms (for example, Net 15) and click Save.
You can also set terms per customer: open the customer, choose Edit, and set Terms on the Payments tab. QuickBooks then calculates each invoice's due date from its terms.
Knowing when Net 30 becomes day 31
Terms only work if someone notices when they're broken. CashWatchdog checks your QuickBooks Online company every morning and emails you the invoices that just passed their due date, so day 31 gets a friendly reminder instead of being discovered at day 60.