How net payment terms work
Net 30 commonly means payment is due 30 days from the agreed starting date. The contract should define whether that date is invoice issuance, receipt, delivery, or another event, and how days are counted.
Hypothetical example: An invoice dated June 1 with payment due 30 calendar days after that date is due July 1. Different contract wording can produce a different due date.
Discounts and overdue balances
A term such as 2/10 Net 30 commonly offers a 2% discount for qualifying payment within 10 days, with the full amount due within 30 days. Specify the starting date, eligible amount, and discount conditions.
A late fee is not automatically authorized by the phrase Net 30. Any charge must be supported by the agreement and applicable law.
Using terms in collections
Store the agreed due date in the billing system and use it consistently in invoice aging. Resolve incorrect invoices or disputed terms before escalation. Reminders should show the balance, due date, and a clear way to raise questions.
Changing terms for future orders does not automatically rewrite an existing invoice's agreed payment schedule.