"Net 30" appears on countless invoices, but what does it actually mean? And how do Net 15, Net 60, and Due on Receipt compare? Here is a clear breakdown.
What "Net" Means
"Net" refers to the number of calendar days from the invoice date until payment is due. Net 30 means payment is due 30 days after the invoice date. If you invoice on February 15, Net 30 means payment is due around March 17 (30 calendar days later).
Net 15, Net 30, Net 60 Explained
Net 15: Due in 15 days. Tighter terms, faster cash flow. Common for freelancers and small vendors.
Net 30: Due in 30 days. The most common B2B term. Gives clients time to process without stretching too long.
Net 60: Due in 60 days. Used by larger clients. Slower for you but sometimes necessary to win or keep big accounts.
Due on Receipt
Payment is due as soon as the client receives the invoice. No grace period. Best for small amounts or when you need immediate payment.
2/10 Net 30
Pay within 10 days and get a 2% discount. Otherwise, full amount due in 30 days. Incentivizes early payment. Example: $1,000 invoice. Pay by day 10: $980. Pay by day 30: $1,000.
Most Common Terms by Industry
Freelancers and small service businesses often use Net 15 or Due on Receipt. Agencies and B2B vendors typically use Net 30. Large enterprises sometimes request Net 60. Retail and e-commerce often use Due on Receipt or immediate payment.
How to Decide
Consider your cash flow needs, industry norms, and client expectations. Shorter terms improve cash flow but may not be acceptable to some clients. Start with what is standard in your field and adjust based on experience.
Impact on Cash Flow
Net 15 gets you paid roughly two weeks sooner than Net 30. On a $5,000 invoice, that is $5,000 in your account sooner. For a business with multiple clients, the difference adds up. If you can afford to wait, Net 30 is fine. If you need faster payment, push for Net 15 or Due on Receipt where possible.
Communicating Terms Clearly
State terms on every invoice. Include "Net 30" or "Due on Receipt" in the payment terms section. Make the due date explicit. Clear terms reduce confusion and disputes.