× Freshbooks App Logo
FreshBooks
Official App
Free - Google Play
Get it
5 Min. Read

What Does Net 30 Mean on an Invoice? A Simple Definition for Small Businesses

On an invoice, net 30 means payment is due thirty days after the invoice date. For example, if an invoice is dated January 1 and it says “net 30,” then the payment is due on or before January 30. A vendor can change the payment terms according to when they want to be paid. Net 10 or 60 are other options, according to Due.

In this article, we’ll cover:

What Does Net 30 Mean on an Invoice?

Net 30 is a term included in the payment terms on an invoice. It indicates when the vendor wants to be paid for the service or product provided. In this case, net 30 means the vendor wants to be paid within 30 full days of the invoice date.

Net 30 is a credit term. The vendor sends the products or performs a service first and then requests payment by a certain date.

Why Use Net 30?

Payment terms like net 30 are essential to include on an invoice because they make it crystal clear when you want to be paid. This prevents any confusion resulting in late payments.

It also increases your chances of being paid on time. This helps a small business’s all-important cash flow and improves its financial position, according to nibusinessinfo.co.uk.

Instead of writing “net 30,” you may want to write “payment is due in 30 days” in your payment terms. This makes matters even more clear to the customer. Your payments terms should always be as clear and concise as possible, and try to include consistent terms invoice to invoice.

Should I Use Net 30?

Small businesses don’t use the same payment terms with every client. You may extend net 30, 60 or 90 to trusted clients who pay on time and then extend net 10 or 15 to new or late-paying clients. Net 10, 30 and 60 are the most common net terms.

A small business can also offer a discount to incentivize clients to pay by the requested date.

  • For example, an invoice with credit terms of net 30 can offer a five percent discount on invoices paid within 10 days. This is written as “5/10, net 30.”

Where Do I Put Net 30 on an Invoice?

Credit terms may have their own section at the top or be added to the terms and conditions section on the bottom. This article will guide you through the process of creating your own payment terms.

In the below example, net 30 can be placed in the “terms” section at the bottom. However, there is also a “due date” at the top that makes clear what day payment is due.

Net 30 Invoice created by FreshBooks

Source: FreshBooks

Want an invoice generator that makes billing easy? FreshBooks has online invoicing software that easily lets you insert payment terms and send reminders.

People also ask:

What Is Net Amount on an Invoice?

Net amount on an invoice is the cost of products or services before sales tax or any other fees like a discount or outstanding balance. The invoice total including tax and other fees is the gross value, according to Bizfluent.

Some companies only include a net number as they are tax exempt. Or an American company is purchasing items from overseas. For example, if an American business buys something from Europe, the vendor may only charge them the net amount, pay for VAT (tax) themselves and then apply for a refund. This saves the American company from having to pay tax and apply for a refund themselves.

A net amount is also useful to show a customer how much they’re paying for products and services purchased before any additional fees.

What Does Net Mean on an Invoice?

Net can mean two different things on an invoice.

  1. Net can apply to payment terms. For example, “net 15” means full invoice payment is due, at the latest, fifteen days from the invoice date.
  2. Net can also apply to the total due on an invoice. The net value of goods or services itemized on an invoice is their value before tax or other fees. The net value tells the customer or client how much they’re paying for an item or service before tax.

What Does Net 10 Mean on an Invoice?

On an invoice, net 10 means that full payment is due in 10 days after the invoice date, at the very latest. Net 10 is a credit term, meaning services and products are sold in advance and the client pays later.

A small business may use shorter payment terms, like net 10, with new customers or customers that tend to pay late. Once the customer starts paying on time, the business may extend longer payment terms like net 30 or net 60.

What Does Net 15 Mean on an Invoice?

On an invoice, net 15 means that full payment is due in 15 days after the invoice date, at the very latest.

Net 15 is part of a company’s payment terms. Instead of asking a client to pay immediately after a product has been delivered or service performed, the vendor gives the client time to pay the invoice. In the case of net 15, the client has 15 days to pay the invoice.

Net 10, 30 and 60 are the most common payment terms. Net 15 is relatively short. A small business may use these terms for new clients or existing clients who haven’t paid their invoices on time in the past.

RELATED ARTICLES

Save time Billing and Get Paid 2x Faster with FreshBooks

Try FreshBooks Free