What does net 30 mean?

What net 30 means

"Net" means the full amount, with no discount taken. "30" is the number of days the customer has to pay. Other common terms work the same way:

• Net 7, Net 14, Net 60: payment due within that many days
• 30 days end of month: payment due 30 days after the end of the month the invoice is dated
• 2/10 net 30: a 2% discount if paid within 10 days, otherwise the full amount within 30
• Due on receipt: payment expected immediately

State on the invoice whether the days run from the invoice date or from delivery, and show the actual due date to avoid arguments.

Example

A supplier issues an invoice for £4,800 dated 3 March on net 30 terms. Payment is due on 2 April. If the terms were 2/10 net 30, the customer could pay £4,704 by 13 March, saving £96, or the full £4,800 by 2 April. Where a VAT-registered supplier offers a prompt payment discount, VAT is due on the amount actually paid.

Why it matters for your business

Payment terms drive cash flow. Offering 60 days when your own suppliers want paying in 30 means you fund the gap. Shorter terms, deposits and staged payments all help, as do reminders a few days before the due date.

In business-to-business sales, the Late Payment of Commercial Debts (Interest) Act 1998 gives you rights if a customer pays late. If no terms were agreed, payment is due 30 days after the invoice or delivery. You can claim statutory interest at 8% above the Bank of England base rate, plus fixed compensation of £40 for debts under £1,000, £70 for £1,000 to £9,999.99 and £100 for £10,000 or more.

For consumer sales, statutory late payment interest does not apply, so set clear terms and take deposits where you can.

Net 30 and your books

Unpaid invoices sit in accounts receivable until paid. Tracking the average number of days customers take to pay shows whether your terms are being followed. Cloudkeepers can set up automatic reminders in Xero or QuickBooks so chasing happens without you having to remember.