Glossary

Net 30

Pay in full within 30 days of the invoice.

Payment terms requiring full payment within 30 days of the invoice date. From a supplier, net-30 is free working capital; to a customer, it is a month of your cash tied up. "2/10 net 30" adds a 2% discount for paying within 10 days, which is a very high annualized return for the payer and a real cost for the seller.

How it appears in a contract

Invoice terms and supplier credit applications.

Worked example

Taking a 2/10 net 30 discount is equivalent to earning roughly 37% annualized on the early payment; if you can fund the early payment cheaper than that, take it.

Illustrative figures on stated assumptions; not quotes.

What to ask

• Can I earn longer terms from suppliers with a payment history?
• Can I shorten customer terms or add an early-pay discount?
• What do 30 days of sales cost me to carry?

Related terms

Net 60 · Working capital · Accounts receivable financing · all terms