Net 30 payment terms mean the buyer must pay the full invoice amount within 30 days. The 30 days usually start on the invoice date and count calendar days, including weekends. Net 60 and Net 90 work the same way with 60 or 90 days. A term such as "2/10 net 30" adds a discount: take 2% off if you pay within 10 days, or pay the full amount by day 30.
This guide explains how to read each term, how to count the due date, what an early payment discount really costs, and how the US federal government sets its own default. That last part gives both buyers and sellers a useful benchmark.
How net terms work
"Net" means the full amount, after any agreed discounts or credits. The number is the days the buyer has to pay.
| Term | What it means |
|---|---|
| Due on receipt | Pay as soon as the invoice arrives |
| Net 10 / Net 15 | Pay within 10 or 15 days |
| Net 30 | Pay within 30 days; the most common B2B default |
| Net 60 | Pay within 60 days |
| Net 90 | Pay within 90 days |
| Net 30 EOM | Pay within 30 days after the end of the invoice month |
| 2/10 net 30 | 2% off if paid in 10 days, else full amount in 30 |
Large enterprise and retail buyers often ask for Net 60 or Net 90 as a condition of doing business. Construction and project work often uses payments tied to milestones instead.
Sources: Peakflo, "Common B2B Payment Terms" and "What is the most common payment term in B2B?"; Resolve, "Net Terms at a Glance"; Neat, "What are the alternatives to net 30 payment terms?"
How to count the due date
Most net terms use calendar days, not business days. Weekends and holidays count. If you want business days, the contract has to say so.
The bigger question is: 30 days from what? There are three common start points:
- Invoice date. The clearest choice, and the most common.
- Date the buyer receives the invoice. Common in large companies and government.
- Delivery or acceptance date. The clock starts when goods arrive or work is approved.
Examples:
- Invoice dated March 1, Net 30: due March 31.
- Invoice dated March 15, Net 30 EOM: due April 30, which is 30 days after the end of March.
- Invoice dated March 1, 2/10 net 30: pay by March 11 to take the 2% off, or pay in full by March 31.
Write the start point on the contract and the invoice. A clear due date is the cheapest way to avoid a payment dispute.
Sources: Resolve, "Are net terms calculated using calendar days or business days?" and "What does EOM (end of month) mean in net terms?"; Peakflo, "The Trigger Date Is the Detail That Matters"
What an early payment discount really costs
A 2% discount sounds small. But the buyer gets it for paying only 20 days early, so the yearly rate is high. The formula is:
Annual cost = discount ÷ (100 minus discount) × 365 ÷ (full term minus discount period)
For 2/10 net 30: 2 ÷ 98 × 365 ÷ 20 = about 37.2% a year.
| Term | Days paid early | Approximate annual rate |
|---|---|---|
| 1/10 net 30 | 20 | 18.4% |
| 2/10 net 30 | 20 | 37.2% |
| 2/10 net 60 | 50 | 14.9% |
| 3/10 net 30 | 20 | 56.4% |
What this means:
- For sellers: a standing 2/10 net 30 offer is costly financing. Many guides suggest using it only for chosen customers or for a set period.
- For buyers: if you have spare cash, taking the discount is often one of the best returns available. Compare it with the interest your cash earns elsewhere.
Sources: Peakflo, "The Real Economics of Early Payment Discounts." The 1/10, 2/10 net 60 and 3/10 rates are our own arithmetic using the same formula.
The federal benchmark: the Prompt Payment Act
Congress passed the Prompt Payment Act in 1982. It requires federal agencies to pay bills on time, to pay interest when they pay late, and to take discounts when it makes sense. The rules sit in Title 5 of the Code of Federal Regulations, part 1315.
Key rules, in plain terms:
- Default due date. If the contract names no date and no discount is taken, payment is due 30 days after the payment period starts. That makes Net 30 the federal default.
- When the clock starts. The period starts when a proper invoice is received. An invoice is treated as received on the later of two dates: the day the agency actually receives it, or the seventh day after the goods are delivered or the services are completed. Acceptance before the seventh day can bring that date forward.
- Bad invoices go back fast. An agency must return an improper invoice no later than 7 days after receipt and list every defect.
- Late payment costs interest. For July 1 to December 31, 2026, the Prompt Payment interest rate is 4.75%.
- Discounts. An agency may take a discount offered on an invoice if it is economically justified, and only after acceptance. The discount period counts from the date on the invoice.
Private businesses do not have to follow these rules. But they show a fair, tested model: a clear start date, a fast check for bad invoices, and a cost for paying late. Compare the 4.75% federal late interest rate with the 37.2% cost of a 2/10 net 30 discount. It shows how expensive early payment discounts are as a way to raise cash.
Sources: Bureau of the Fiscal Service, "Prompt Payment"; 5 CFR 1315.4, Prompt payment standards and required notices to vendors; 5 CFR 1315.7, Discounts
Pros and cons of offering Net 30
| For the seller | Pros | Cons |
|---|---|---|
| Sales | Can win larger and repeat orders | Some customers stretch past the due date |
| Cash flow | Predictable timing once customers pay on time | Cash arrives up to 30 days later |
| Risk | Builds trust with good customers | A customer may never pay |
| Admin | Standard and widely understood | Needs credit checks and follow-up |
Before offering terms, many sellers run a credit check, start new customers on shorter terms, and set a credit limit. Credit terms, invoicing and collections sit inside a seller's wider revenue process, and firms that work on that process are listed in our RevOps consultancy register.
Sources: Mooninvoice, "What are the Advantages of Using the Net 30 Payment Term?" and "What are the Disadvantages"; Resolve, "How to Choose the Right Net Terms for Your Business"
What to write on the invoice
A clear invoice gets paid faster. Include:
- Invoice number and invoice date.
- The term in full words, such as "Payment due within 30 days of the invoice date (Net 30)."
- The exact due date.
- Any discount, written out: "2% discount if paid by March 11."
- Any late fee, but only if the contract allows it.
- The purchase order number, if the buyer uses one.
- How to pay.
The federal rules list similar items for a proper invoice, including the contract or order number, a description of the goods, quantities, unit prices and payment terms. Many buyers check an invoice against the purchase order and the receipt before paying. Payment terms usually live in the master service agreement for ongoing work.
Sources: FAR 32.905(b), Content of invoices; Dodo Payments, "What to Write on the Invoice"
Frequently asked questions
What does net 30 mean?
Net 30 means the full invoice amount is due within 30 days. The 30 days usually start on the invoice date and include weekends and holidays.
What does 2/10 net 30 mean?
2/10 net 30 means the buyer can take 2% off if it pays within 10 days, or pay the full amount within 30 days. The discount works out to about 37% a year.
Is net 30 counted in business days or calendar days?
Net 30 is counted in calendar days unless the contract says otherwise. Weekends and public holidays count toward the 30 days.
What is the difference between net 30 and net 60?
The difference is the time allowed to pay. Net 30 gives the buyer 30 days and Net 60 gives 60 days, so the seller waits longer for cash under Net 60.
What does net 30 EOM mean?
Net 30 EOM means payment is due 30 days after the end of the month in which the invoice is dated. An invoice dated March 15 is due April 30.
What are standard payment terms for federal contracts?
The federal default is payment 30 days after a proper invoice is received, when the contract names no other date. Agencies that pay late generally owe interest under the Prompt Payment Act.
Sources
- Bureau of the Fiscal Service, US Department of the Treasury, "Prompt Payment." fiscal.treasury.gov/prompt-payment
- 5 CFR 1315.4, Prompt payment standards and required notices to vendors. ecfr.gov
- 5 CFR 1315.7, Discounts. ecfr.gov
- Federal Acquisition Regulation 32.905, Payment documentation and process. acquisition.gov/far/32.905
- Peakflo, "Invoice Payment Terms Explained." peakflo.co
- Resolve, "Net Terms 2026 Guide: What Are Net 30/60/90 Terms?" resolvepay.com
- Mooninvoice, "What Does Net 30 Mean?" mooninvoice.com
- Neat, "What does Net 30 Mean?" neat.com
- Dodo Payments, "Payment Terms Explained: Net 30, Net 60, and Due on Receipt." dodopayments.com