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Net 30
Also called net terms, net 60, net 90, trade credit terms.
Trade credit terms giving a customer thirty days from the invoice date to pay in full, with net 15, net 60 and net 90 as the common variants.
Drafted with AI assistance. Not yet independently checked. Nobody has verified the claims on this page against a source, so treat the figures and legal points as a starting point rather than as settled, and confirm anything you are about to act on. How we check things.
What it means
Selling on terms means delivering first and being paid later. The gap between the two is the working capital hole that invoice factoring, purchase order financing and asset-based lending all exist to fill.
Terms are sometimes written with an early payment discount attached: "2/10 net 30" means two percent off if paid within ten days, otherwise the full amount at thirty. That discount is expensive money when annualised, which is why suppliers who offer it often should not, and why customers who skip it often should not either.
Stated terms and actual behaviour diverge. Large customers commonly pay on their own cycle rather than yours, and the metric that matters for financing decisions is days sales outstanding - what your customers actually do - not the number printed on the invoice.
Where this one catches people
Net 30 describes when a payment becomes late, not when it arrives. A business financing against net 30 terms and budgeting for thirty-day cash conversion is planning around a number its customers never agreed to hit. Size the facility against your real DSO, including the tail of slow payers.
Worked through
Illustration of a discount term. On 2/10 net 30, taking the discount means paying 98 instead of 100, twenty days early. That is 2/98 for twenty days, roughly 2.04% for a twentieth of a year - annualising to about 37%. A supplier offering it is paying that rate for early cash; a customer declining it is borrowing at that rate for twenty days.
Figures in the example are illustrative. They show the arithmetic, not a quote — what any one lender would charge is on that lender's page, where it is published at all.
Where you will meet this term
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Net 30 — common questions
What does net 30 mean?
Trade credit terms giving a customer thirty days from the invoice date to pay in full, with net 15, net 60 and net 90 as the common variants.
Where does net 30 catch people out?
Net 30 describes when a payment becomes late, not when it arrives. A business financing against net 30 terms and budgeting for thirty-day cash conversion is planning around a number its customers never agreed to hit. Size the facility against your real DSO, including the tail of slow payers.
Is net 30 the same as an interest rate?
Net 30 is defined above; if you are comparing it against a rate, check whether the two measures share a time dimension before you put them side by side.
Which products does net 30 apply to?
Working Capital, Invoice Financing, Asset-Based Lending.
Is there a worked example of net 30?
Yes, on this page, and it is labelled illustrative. It shows the arithmetic, not a quote from any lender.
What else should I read alongside net 30?
Days sales outstanding, Invoice factoring, Purchase order financing, Receivable, Reverse factoring.
Has this definition been checked?
Not yet. This entry is drafted and live, and the notice at the top says so. Confirm anything you are about to act on.
Is this legal advice?
No. It is a definition. What a clause does in your contract, in your state, is a question for a lawyer licensed where you are.
Can I suggest a term?
Yes — [email protected]. The glossary grows from what people are actually shown in contracts.