What does net 30 mean on an invoice?
Payment terms decide when money actually arrives. Net 30 is one of the most common terms in business-to-business trade, and small misunderstandings about it are a frequent cause of late payments.
How to calculate the due date
Take the start date and add 30 calendar days, including weekends and holidays. The start date is normally the invoice date, but some contracts count from delivery or from the day the customer receives the invoice. Whatever you agree, write the exact due date on the invoice, not only "net 30", so neither side has to calculate.
Common variations
- Net 15, net 45, net 60: the same rule with 15, 45 or 60 days.
- 2/10 net 30: the customer may deduct 2% if paying within 10 days; otherwise the full amount is due within 30 days.
- Net 30 EOM: 30 days counted from the end of the month in which the invoice was issued.
- Due on receipt: payment is expected immediately.
A small example
You issue an invoice for 4,000 EUR on 3 March with terms 2/10 net 30. If the customer pays by 13 March, they may pay 3,920 EUR. After that the full 4,000 EUR is due by 2 April. From 3 April the invoice is overdue. (illustrative numbers)
What the law says
Payment terms are mostly a matter of contract, but many countries set limits and defaults for business customers. In the EU, the Late Payment Directive generally provides for a 30-day period when no term is agreed and limits agreed terms between businesses to 60 days unless expressly agreed and not grossly unfair to the creditor. It also allows statutory interest on late payments. National rules differ in detail, so check what applies to your contracts.
How OrgLines helps
In OrgLines each invoice carries its payment due date, and payments are allocated to invoices. The finance module's ageing report shows overdue documents on both sides, what you owe and what you are owed. Drafts and documents without a due date do not age, because an invoice that was never sent cannot be overdue. The cash flow forecast places an expected payment on the invoice's due date, not on the day the record was created, so net 30 and net 60 customers show up in the right week.