What Does “Net 30” Mean in a Contract?
Payment is due within 30 days of the invoice date, with no discount for early payment.
Detailed Explanation
"Net 30" means the full amount is due within 30 days of invoicing. "Net" indicates no discount applies - you pay the invoiced amount. Other common terms include Net 15, Net 60, or Net 90.
Contrast this with terms like "2/10 Net 30," which means you can take a 2% discount if you pay within 10 days, otherwise the full amount is due in 30 days.
Example in a Contract
“All invoices shall be payable Net 30 from the date of invoice. Late payments shall accrue interest at the rate of 1.5% per month.”
Why It Matters
Payment terms affect cash flow for both parties. If you're the one paying, longer terms give you more flexibility. If you're the one billing, shorter terms improve cash flow. Also note any late payment penalties.
Related Terms
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