Net terms

Net terms

Net terms are an agreement to supply goods now and be paid within a fixed number of days, so "net 30" means the full invoice amount falls due 30 days after the invoice date.

The clock start matters more than the number

Three common variants of net 30 produce three different due dates.

• Net 30 from invoice date. Due 30 days after you invoice.
• Net 30 EOM, or 30 days end of month. Due 30 days after the last day of the month the invoice falls in. An invoice dated the 1st is paid roughly 60 days after supply.
• Net 30 from delivery.

Agree which one in writing. Most late-payment disputes in wholesale are about the start date, not the number of days.

Early settlement discounts

Written as 2/10 net 30: take 2% off if you pay within 10 days, otherwise the full amount at 30.

Price that before offering it. Giving up 2% to be paid 20 days early works out at roughly 37% annualised. Offer it only if your own cost of finance is higher than that, and take it when a supplier offers you one.

Terms are credit you extend, so they need the apparatus of credit: a limit per customer, an agreed stop when they exceed it, and someone chasing at day 31.

ibakepro holds terms, limits and a price list per account. See wholesale ordering.