What does net 30, net 60, or net 90 mean on an invoice?
Net 30, net 60, net 90 on an invoice — what they mean and which to use
Short answer
Net 30 means the full invoice amount is due within 30 calendar days of the invoice date. Net 60 and net 90 follow the same logic with 60 or 90-day windows. The 'net' refers to the net amount owed — before any early-payment discount. If an invoice says '2/10 net 30', it means the client can take a 2% discount if they pay within 10 days, but the full amount is due by day 30 regardless. These terms are a negotiated agreement between you and the client, not a legal default — you can set whatever terms your contract specifies.
The word 'net' on payment terms does not mean 'net profit' — it means 'net amount due', i.e., the total before any early-payment discount. Net 30 simply means the client has 30 days from the invoice date to pay the full amount. Net 15, net 45, net 60, and net 90 work identically with their respective day counts. The most common terms in US B2B service businesses are net 30 for smaller engagements and net 45 or net 60 for larger enterprise clients.
Early-pay discount notation (2/10 net 30) means: pay within 10 days and deduct 2%, or pay the full amount within 30 days. The discount rate looks small, but 2/10 net 30 annualizes to roughly 36.5% — meaning you are effectively lending money at that rate when you extend net-30 terms. If your cost of capital is lower than that, early-pay discounts are worth offering to accelerate cash. If your margins are thin, be cautious.
Which terms should you use? For most service businesses working with small and medium clients, net 15 or net 30 is standard. Net 60 and net 90 are common in manufacturing, government contracting, and large enterprise deals where procurement processes are slow. If a client demands net 60 or net 90 on a $5,000 project, you are effectively extending a 2–3 month interest-free loan — build a carrying cost into your pricing, require a deposit, or negotiate shorter terms.
The invoice date vs. receipt date distinction matters. Most net-X terms run from the invoice date. Some clients interpret it as starting from when they received the invoice, or when they approved it in their AP system. Specify in your contract: 'Payment terms are net 30 from invoice date.' This prevents disputes about when the clock started.
Late fees attach when payment is not received by the due date. If your contract includes a late fee clause (say 1.5% per month on outstanding balances), the fee accrues starting on day 31 for a net-30 invoice. Without a contract clause, you cannot impose late fees unilaterally — the client can decline to pay them. This is why the payment terms and late-fee clause belong in the same section of your service agreement.