Invoice Payment Terms Explained: Net 30, Net 60, 2/10, and More
Payment terms tell the buyer when they need to pay. They appear on every invoice but are rarely explained. If you’re setting terms for your own invoices or interpreting terms from vendors, here’s what each one means.
Common Payment Terms
Net 30
Pay within 30 calendar days of the invoice date. This is the most common term in B2B transactions. It gives the buyer a month to process and pay.
Net 60 / Net 90
Pay within 60 or 90 days. Common in industries with long production cycles or large enterprises that batch payments monthly. As a small business vendor, avoid offering Net 90 unless the client is worth the cash flow risk.
Due on Receipt
Pay immediately upon receiving the invoice. Common for freelancers, small service providers, and first-time clients. It’s the safest term but can feel aggressive to established business relationships.
2/10 Net 30
Pay within 10 days to get a 2% discount, or pay the full amount within 30 days. This incentivizes early payment. For the buyer, taking the discount is equivalent to earning a 36% annualized return — almost always worth it.
EOM (End of Month)
Pay by the end of the month in which the invoice was received. Sometimes combined with a buffer: “Net 15 EOM” means pay within 15 days after the end of the invoice month.
COD (Cash on Delivery)
Pay when goods are delivered. Common in wholesale and distribution.
Which Terms Should You Set?
As a vendor:
- New clients: Due on Receipt or Net 15
- Established clients: Net 30
- Enterprise clients: Net 30–60 (negotiate based on order size)
- Always offer an early payment discount if cash flow matters
As a buyer:
- Take every early payment discount available — the math always works in your favor
- Negotiate longer terms if cash flow is tight, but honor them reliably
Tracking Payment Terms
The key to managing payment terms is knowing exactly what’s owed and when. If invoices sit in your email unprocessed for days, you’re already behind before the clock starts.
Automated invoice capture ensures every invoice enters your system the day it arrives, giving you the full payment window to work with. Foozool extracts invoices from Gmail and Outlook and pushes them into your accounting software immediately.