What are net payment terms on an invoice?

Net payment terms define the payment window stated on an invoice. Net 30 means the full balance is due 30 days from the invoice date. Net 60 gives 60 days, net 90 gives 90. The word net refers to the total amount owed after any discounts or credits. These terms are conventions, not laws, and they vary significantly by industry, by the size of the buyer relative to the seller, and by how much negotiating leverage each side has at deal time.

The cash-flow cost of net payment terms is frequently underestimated. A seller with net 60 terms on a meaningful volume of annual revenue is continuously carrying two months of earned revenue in accounts receivable. That capital has a real cost even if it is never formally borrowed — it is cash that cannot be reinvested, used for payroll, or deployed elsewhere while it waits for the invoice to mature.

Shortening payment terms requires either negotiation or enforcement, both of which are easier when the seller consistently follows up within a day or two of the due date. Customers tend to pay to the terms they know will actually be enforced.