One of the most prevalent payment terms is Net 30, which is a credit term that requires payment within 30 days of the invoice date. Net 30 can be used with a discount to promote early payment, but it can also be used without any incentives.

Net 30: What does it Mean?

Are you ready to start offering credit terms to your customers? Then you'll probably be interested in finding out more about net 30.

Net 30 is one of the most widely used credit terms among bookkeepers and accountants, and it simply means that you're providing your customers credit and expect them to pay the invoice in full within 30 days of the invoice date.

Customers may be confused when the net 30 period begins, but the invoice date is always the determining factor.

If Marge sends you an invoice with net 30 terms dated September 4, you must pay the net, or total amount due, by October 3.

If you wish to open an account, Wise Business Plans offers a net 30 account.

Net 30 vs. Due in 30 days: What's the Difference?

The wording "net 30" and "due in 30 days" on an invoice have the same meaning in most cases, indicating that your client must pay the invoice within 30 days. These two terms will only change if you're offering discounts in addition to the net 30 terms.

Net 30 terms: 5 Benefits

If you're still on the fence about whether or not to offer credit terms, understanding some of the benefits of employing net 30 payment terms might help you decide.

1. Expands Your Customer Base

If you're still undecided about whether or not to offer credit terms, knowing some of the advantages of using net 30 payment terms may help you make your decision.

2. Offers a Strong Incentive for Your Customers

If you sell to bigger companies on a regular schedule, you know how difficult it is to acquire payment up ahead or at the time of service.

If you offer credit terms like net 30, it's much easier for your customers to run your invoice through their typical processes and still pay you within the 30-day time frame specified on the invoice.

3. Let’s You add an Early Payment Discount

One of the most effective ways to encourage your consumers to pay on time is to offer an early payment bonus. You can provide an early payment incentive to your clients if you currently offer net 30 terms but would like them to pay a little faster.

For example, if you want to offer a 2% discount to customers who pay early, you might change the billing period to 2/10 net 30.

This means that if your customer pays within 10 days of the invoice date, they will receive a 2% discount. If they do not pay promptly, the invoice is due at the net amount 30 days after the invoice date.

4. Helps Your Business Remain Competitive

If your competitors provide net 30 terms to their customers while you insist on upfront payment, it's impossible to compete. While not every business can offer credit terms to every customer, doing so can help you stay competitive.

5. Builds Customer Loyalty

Offering credit terms to your customers can help them create trust and loyalty, and it could even lead to a lifelong customers.