The Procurement Glossary » Net Terms (Net 30 / 60 / 90)
Net Terms (Net 30 / 60 / 90)
Finance & Payments
Definition
Payment terms specifying the number of days a buyer has to pay in full after the invoice date.
Explanation
'Net 30' means full payment is due 30 days after the invoice. Longer net terms improve the buyer's cash position but delay supplier payment. They are the most common form of trade credit between businesses.
Example
On net-60 terms, an invoice dated 1 March is due by 30 April.
Related terms
- Payment Terms — The agreed conditions for when and how a buyer pays a supplier, such as 'net 30 days' from invoice date.
- Credit Terms — The conditions under which a supplier extends trade credit to a buyer, including limit, period and any security.
- Early Payment Discount — A discount a supplier offers for paying an invoice ahead of its due date, such as '2/10 net 30'.
- Days Payable Outstanding (DPO) — The average number of days a company takes to pay its suppliers.
Frequently Asked Questions
What is Net Terms (Net 30 / 60 / 90)?
Payment terms specifying the number of days a buyer has to pay in full after the invoice date. 'Net 30' means full payment is due 30 days after the invoice. Longer net terms improve the buyer's cash position but delay supplier payment. They are the most common form of trade credit between businesses.
Can you give an example of Net Terms (Net 30 / 60 / 90)?
On net-60 terms, an invoice dated 1 March is due by 30 April.
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