Net 30 means the full invoice amount is due 30 calendar days after the invoice date, unless agreed terms specify another starting point. An invoice dated 1 October 2026 is therefore due on 31 October. Before accepting longer terms, calculate the cash tied up while you wait.
What do the common payment terms mean?
Net 30 means payment is due 30 calendar days after the invoice date. Net 15 and net 60 work the same way with 15 and 60 days, due on receipt means payable when the invoice arrives, and 2/10 net 30 adds a 2% discount for paying within 10 days. Every row below uses an invoice dated 1 October 2026, except the net 30 EOM row, which uses 2 October.
| Term | What it means | Due date |
|---|---|---|
| Due on receipt | Payable when the invoice arrives | On receipt |
| Net 15 | Full amount within 15 days of the invoice date | 16 October 2026 |
| Net 30 | Full amount within 30 days | 31 October 2026 |
| Net 60 | Full amount within 60 days | 30 November 2026 |
| 2/10 net 30 | 2% off if paid within 10 days, otherwise the full amount within 30 | 11 October 2026 with the discount, 31 October without |
| Net 30 EOM | 30 days after the end of the month the invoice is dated in | 30 November 2026 for an invoice dated 2 October |
Net 30 EOM is the one that catches people out. An invoice dated 2 October is due on 30 November, nearly two months later, even though "30" is in the name. Some companies use EOM to mean something slightly different, so write the actual due date on the invoice rather than relying on the abbreviation.
What does it cost to give a customer net 60?
Net 60 on a €12,000 monthly invoice ties up about €24,000 of cash and takes 0.8 months off a startup's runway for as long as the contract runs. In the example, the startup has €240,000 in the bank and a net burn of €30,000 a month, which is eight months of runway. It signs a new customer at €12,000 a month, invoiced monthly, and the customer's procurement team asks for net 60.
This simplified comparison holds net burn at €30,000 to isolate the working-capital effect. Payment terms change how much revenue is still unpaid, rather than the amount invoiced:
| Terms | Unpaid at any time | Cash you can actually use | Runway |
|---|---|---|---|
| Due on receipt | about €0 | €240,000 | 8.0 months |
| Net 30 | about €12,000 | €228,000 | 7.6 months |
| Net 60 | about €24,000 | €216,000 | 7.2 months |
cash tied up = monthly invoice x (payment days / 30)
= 12,000 x (60 / 30)
= 24,000
That 0.8 months can be a fair price for landing the customer. Decide it with the number in front of you, and consider the levers you have:
- Invoice monthly in advance, at the start of each service period, so net 30 lands roughly when the month of service ends.
- Accept longer terms and put them in the price.
- Offer net 30 with an early payment discount, if cash now matters more than margin.
A customer big enough to dictate terms is also one you may come to depend on. When one customer is too big covers that risk.
What does an early payment discount really cost?
A "2/10 net 30" early payment discount costs the seller about 37.2% a year. It looks like a small discount, but the customer pays 98% of the invoice 20 days earlier than they had to, in exchange for 2%. The formula below gives the annual rate.
annual cost = discount / (1 - discount) x 365 / (full days - discount days)
= 0.02 / 0.98 x 365 / (30 - 10)
= 37.2% a year
You are paying 37.2% a year for that money. Offer it when you need cash badly and have no cheaper way to get it, and not as a default because it looks professional.
What are the legal limits on long payment terms?
Long payment terms are limited in both the EU and the UK. In the EU, the Late Payment Directive says the payment period in a business contract should not exceed 60 calendar days unless it is expressly agreed and not grossly unfair to the supplier (Directive 2011/7/EU, Article 3).
In the UK, an agreed payment date must usually be within 60 days for business transactions, and longer terms have to be fair to both sides; public authorities have 30 days (GOV.UK, when a payment becomes late).
Before accepting net 90, check the contract, local rules and the cash needed to cover the waiting period.
Once the terms are agreed
The due date only helps if the invoice goes out on time and someone follows up when it passes. Getting paid on time follows one invoice from contract to cash and covers reminders and late-payment interest. For the forecast, count money when it arrives rather than when you invoice: revenue on net 60 is revenue now and cash in two months, and a cash flow forecast that ignores the gap shows a longer runway than you have.