Invoicing became a normal business practice 4,000 years ago, when Mesopotamians merchants recorded transactions on clay tablets. Net terms are not far behind, with merchants offering trade credit to customers in ancient civilizations. And yet, questions about net terms–specifically net 30 terms–still persist. We’ll answer the most frequently asked questions about the topic in this article.
Net 30 is a payment term that gives customers 30 calendar days from the invoice date to pay for goods or services. It’s one of the most widely used terms in B2B transactions and is considered standard in many industries.
Net 30 is common but not standard for all industries. It is widely used in manufacturing, wholesale, and business services. However, industries like construction or creative services may use shorter payment terms, such as Net 15, longer terms like Net 60, or milestone payments. Longer net terms are common in retail, fashion, and energy.
According to a 2023 QuickBooks survey, over 60% of small businesses use net 30 as their default invoice term (source). However, confusion around when the 30 days starts—date of invoice, delivery, or acceptance—can lead to missed payments and strained relationships.
Net 30 is one of the most widely used invoice terms in business-to-business (B2B) transactions. It means that your client has 30 calendar days to pay the full amount of an invoice—starting from the invoice date, the delivery of goods, or the completion of services, depending on your agreement.
If you send an invoice dated June 1, payment is due by June 30—even if that includes weekends, national holidays, or your client’s vacation.
Rethinking Early Payment Discounts
While early payment discounts like 2/15 net 30 can seem beneficial, we’ve don’t recommend them. Here’s why:
Our approach to getting businesses paid early – by advancing capital for outstanding invoices – focuses on giving you the benefits of prompt payment without the above drawbacks. Additionally, we make our process easy for your clients to encourage timely payments by net terms. This strategy aligns better with maintaining healthy cash flow and building sustainable client relationships.
Yes, Net 30 includes weekends and holidays. The term means payment is due 30 calendar days from the invoice date. It does not refer to business days unless specified. If the due date falls on a weekend or holiday, companies often process payment on the next business day. So if you issue an invoice on July 1, the due date is July 31, regardless of how many Saturdays, Sundays, or statutory holidays fall within the payment period.
Why it matters: Some businesses mistakenly believe Net 30 means 30 business days—which would extend the payment window by 2+ weeks. Clarifying this can prevent late payments and confusion.
The Net 30 clock usually starts from the invoice date, not the delivery date. Unless a contract states otherwise, payment terms like Net 30 are calculated based on the date the invoice is issued. Always check the agreement for exceptions or alternate terms.
The term 2/15 Net 30 is a payment incentive that rewards clients for paying early.
If your invoice total is $10,000 and your client pays within 15 days, they only owe $9,800 (a 2% discount). If they pay after day 15 but before day 30, they owe the full amount.
At first glance, early payment terms like 2/15 Net 30 seem like a win-win—clients save money, and you get paid faster. But after working with hundreds of businesses navigating cash flow management, we’ve found these discounts often come with hidden costs that outweigh the benefits.
Here’s why we recommend rethinking them.
That small 2% discount for paying early? It’s not as harmless as it looks.
Let’s break it down:
If a client takes a 2% discount for paying 15 days early, that’s an annualized rate of 48%. A 5% discount over 30 days? That’s equivalent to a 60% APR—which would make any CFO’s eyes widen.
According to The Wall Street Journal, early payment discounts can quietly “shave thousands off your bottom line” if used habitually, particularly for large-ticket invoices. (source)
In our experience, offering early payment incentives can inadvertently train clients to expect discounts—even when they pay on time, not early.
What starts as a courtesy can become a point of contention, especially with long-term clients who begin seeing the discount as a standard. This undermines your pricing integrity and can complicate future negotiations.
Ironically, a strategy designed to accelerate payments can actually make cash flow more volatile.
When you’re unsure who will take the discount and when, revenue forecasting becomes guesswork. It gets harder to plan for payroll, inventory, or debt repayments when payments fluctuate by 2–5% across clients.
In a 2022 survey by QuickBooks, 1 in 4 small businesses cited “unpredictable payment timing” as their biggest barrier to growth (source).
Instead of giving up revenue through discounts, consider getting your accounts receivable paid early with a factoring company who can give your more than working capital. That’s our approach.
We help businesses access funds immediately after invoicing, without waiting 30, 45, or 60 days. Your clients still pay on Net 30 or whatever net terms you’ve set. But you get your money upfront–along with added values like A/R management and collections support. (Don’t worry, we treat your customers like our own.)
This creates:
Working capital for growth, payroll and more
A 30-day account is another way of saying an invoice due in 30 calendar days. In simple terms, it refers to the expectation that payment will be made within 30 days of the invoice date.
While the term “account” might sound complex, it’s just business lingo. Some call it an invoice, others call it a bill—but the meaning of “account” in this context is the same:
A document that outlines the amount owed for goods delivered or services completed, along with a clear payment deadline. Ex: Net 30 accounts
The term “3/10 Net 30” is a type of early payment discount.
Here’s how it breaks down:
You invoice a client for $50,000 on June 1.
A 3% discount over 20 days effectively costs your business an annualized rate of over 54%—a steep trade-off for a slightly faster payment.
2/10 Net 30 is a type of early payment discount. Here’s how to calculate it:
2 = 2% discount
10 = Discount applies if paid within 10 days
Net 30 = Full invoice amount is due in 30 days if the discount isn’t used
Example Calculation of 2/10 Net 30:
Let’s say you issue an invoice for $100,000:
If the client pays by day 10, they only owe $98,000
If they pay on day 11 or later (up to day 30), they owe the full $100,000
According to QuickBooks, businesses that offer early payment discounts see a 30% improvement in average payment speed, though not all clients take advantage of it (source).
Encourages faster payments
Can improve short-term cash flow
Reduces the risk of late payments
You lose 2% of your revenue per invoice for only slightly faster payment
Can set a precedent clients may always expect
Not dependable, since clients might not take the discount
It’s most useful if:
You need working capital quickly
You can afford the margin hit
Your cost of borrowing is higher than 2% per 10 days, roughly a 37% APR
What happens if a customer doesn’t pay within Net 30 terms?
If a customer doesn’t pay within Net 30 terms, the invoice becomes overdue, and the seller may charge late fees or interest. The seller can also suspend services, withhold future deliveries, or send the account to collections. Repeated non-payment may damage the customer’s credit rating or business relationship.
Yes, you can charge late fees for missed Net 30 payments if your contract or invoice terms clearly state this policy. Most businesses include a late fee clause outlining the percentage or flat fee applied to overdue invoices. Without written terms, charging late fees may not be enforceable.
Yes, Net 30 terms help build business credit if payments are made on time and reported to credit bureaus. Many suppliers and vendors report payment history to agencies like Dun & Bradstreet or Experian. Positive Net 30 history improves your business credit score, making it easier to secure financing, like credit cards, and higher credit limits.
Write Net 30 terms in a contract by stating: “Payment is due within 30 days of the invoice date.” You can also include details on late fees, interest rates, and acceptable payment methods. Ensure the terms are clear, consistent across invoices, and agreed upon by both parties in writing.
Companies offer Net 30 terms to encourage sales and build trust with buyers–and because they have to, as buyers dictate net terms. This trade credit gives customers time to receive goods, inspect them, and manage cash flow before making the full payment.
Offering Net 30 is risky for small business owners because it can strain cash flow. Small businesses may face late payments, making it harder to cover expenses like payroll or inventory. Without strong credit policies and reliable customers, Net 30 increases the chance of late or unpaid invoices.
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