Net 30: What It Means, How Businesses Use It

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What Net 30 means
- 10, 20 and 60 days are also commonly used time frames. On an invoice, these could also be written Net 10, Net 20 and Net 60, respectively.
- Other payment terms can be added. For example, Net 30 EOM means the payment must be made by the 30th day of the following month. If the invoice is dated Oct. 15, the payment is due on Nov. 30.
- A business might alter the time frame from customer to customer. Trusted customers with a record of on-time or early payments might be given a longer time frame as a courtesy or perk.
- There's no requirement to use this shorthand. You can instead write the specific date the payment is due or opt for a phrase like "due within 30 days of the invoice date."
- Shorter windows can prompt faster payments. Accounting software company Xero states on its website that short time frames will likely mean more customers pay late. However, invoices with shorter payment windows tend to be paid quicker than invoices with longer time frames, even accounting for late payments.
- Some merchants offer a discount if the buyer pays quickly. For example, a payment might be due within 30 days, but you could offer a 2% discount if the buyer pays within 10 days. This can be written as "2/10 Net 30."
- Don't delay. Sending invoices to customers can sometimes float to the bottom of a to-do list. If you're looking for ways to speed up your cash flow, see if there's any time you can save on the front end by getting invoices out the door faster.
Communication and automation tools
- Create default payment terms. Auto-populate new invoices with the terms you prefer.
- Automate reminder emails. A set number of days before the deadline, automatically nudge customers who haven't settled up. Then, prompt them if they still haven't paid when the deadline passes. Or, send an alert to every customer whose invoice is past due with one click.
- Maintain customer profiles. Note if a customer has billing issues in a customer management system.
- Include a link to a payment page. Doing so in your digital invoices removes friction and can speed up payment time.
- Add a late fee. This can discourage late payments. Automatically apply the fee to overdue invoices.
How Net 30 shows up in reporting
Is Net 30 right for your business?
Article sources
Best Accounting Software for Small Businesses