Net Terms

Net terms specify how many days a buyer has to pay after receiving an invoice. "Net 30" means payment is due 30 days from the invoice date; Net 60 and Net 90 extend that further. They are a routine form of short-term credit between businesses, letting the buyer take delivery now and pay later.

Longer net terms are easier on the buyer and harder on the seller's cash flow, which is why they are negotiated. Contracts sometimes pair net terms with an early-payment discount (2/10 Net 30: a 2 percent discount if paid within 10 days) to encourage faster payment. Net terms are one piece of the broader payment terms.