Cash flow problems are a common reality in business transactions. Many companies find their working capital tied up in ongoing operations, which makes it difficult to acquire the tools and services they need to grow. These financial constraints push those businesses toward flexible financing options, and one common solution is net payment terms.
In this article, we compare Net 30, Net 60, and Net 90 and cover how they help B2B buyers meet their cash flow needs and help merchants build stronger client relationships. We also cover what factors to consider when deciding which payment window to offer or accept.
What Are Net 30 Payment Terms?
Net 30 payment terms allow a buyer to receive goods or services right away and pay the full invoice within 30 calendar days of the invoice date. This is the most common form of net terms in B2B commerce and is widely accepted across industries such as wholesale distribution, manufacturing, and B2B eCommerce.
For buyers, Net 30 provides short-term breathing room to manage cash flow without taking on long-term debt. It gives them time to complete projects or collect payments from their own customers before paying the merchant.
What Are Net 60 Payment Terms?
Net 60 extends the payment window to 60 days after the invoice date. This gives buyers more time to raise the funds they need to repay the credit loan, which can be especially helpful if they are placing larger orders or operating on seasonal or project-based revenue cycles.
Offering Net 60 can make your business more attractive to customers who need the extra payment flexibility, giving you a more significant competitive advantage.
What Are Net 90 Payment Terms
Net 90 offers buyers the longest extended terms, giving them 90 days to pay the full invoice. Sellers typically reserve these terms for their most valued relationships, whether that means enterprise-level clients or longtime customers who have proven their reliability over years of doing business together.
Organizations that request Net 90 often have complex budgeting cycles, large procurement processes, or slower revenue collection timelines, making the extended payment period necessary to align with their internal workflows.
Differences Between Net 30, Net 60, and Net 90
Here are the main ways Net 30, 60, and 90 differ from each other:
- Payment periods and impact on cash flow: Net 30, 60, and 90 each have their respective payment windows: 30, 60, and 90 days, respectively. Longer terms give buyers extra time to manage their cash flow, but they also mean sellers have to wait longer to receive payment.
- Buyer flexibility: Net 60 and Net 90 give buyers more time to manage cash, plan for larger orders, or navigate internal approval processes. Net 30 still provides flexibility, but allows sellers to receive payment more quickly.
- Risk exposure: Longer terms increase the risk of late or missed payments; Net 90 carries the highest risk, followed by Net 60, while Net 30 generally limits exposure to credit and collection issues.
- Order size and customer relationships: Net 60 and 90 can encourage larger orders and strengthen relationships with high-volume or enterprise clients compared to Net 30.
- Administrative demands: Net 60 and Net 90 require more effort to track invoices, send reminders, and handle late payments, while Net 30 invoices are paid sooner, which means less administrative work.
Pros of Net Payment Terms
- A flexible payment option that's widely accepted across B2B industries. It's easy to set clear expectations with new customers and reduce friction during onboarding and contract negotiations.
- Sellers benefit from predictable payment schedules that make forecasting easier, while buyers appreciate the flexibility to manage their cash flow without resorting to credit cards or loans that carry interest charges.
- Can lead to larger orders since buyers don't have to pay in full at checkout.
- Shorter net terms like Net 30 are easier to manage than extended options.
Cons of Net Payment Terms
- Still delays payment compared to traditional payment methods, where full payment is required before buyers can receive their goods. This can put pressure on cash flow for small business owners who need to be paid faster.
- Late payments can create gaps in working capital, especially when multiple invoices are outstanding.
- Requires ongoing invoicing, follow-ups, and tracking of accounts payable to make sure payments are collected on time. As volume grows, managing invoice payments across multiple customers means more admin work.
- Creates credit risk and bad debt if buyers pay late or don't pay at all due to cash flow issues. To combat this risk, many businesses offer discounts and other incentives to encourage early payments, but this could eat into their profit margins over time.
Which Should You Choose?
The right choice depends on who you are selling to and what your own business can handle. Here's when to use each B2B payment option:
- Net 30: Works well for small businesses, letting them buy what they need while keeping cash flow predictable.
- Net 60: Good for businesses with bigger orders or seasonal sales. It gives them extra time to pay without disrupting their operations.
- Net 90: Best for large or long-term customers with complex budgets. It offers the most flexible credit extension and the longest payment period.
Seamlessly Offer Extended Payment Terms With Credit Key
Offering Net 30 terms can be complex and time-consuming. It requires credit checks, invoicing, and collections that take your team away from core business priorities. Managing these processes in-house can affect how fast you grow and put strain on resources, especially as your customer base expands.
Working with a platform like Credit Key simplifies the process, letting you extend flexible credit without taking on risk or extra administrative work. You get paid within 48 hours while Credit Key handles approvals, billing, and collections, and your buyers enjoy a fast, digital experience with no personal guarantee.
This setup helps you maintain predictable cash flow, strengthen customer relationships, and focus on growing your business.
FAQs
How can you guarantee timely payments when offering net payment terms?
Here are steps you can take to ensure a client pays on or before the due date:
- Offer early payment discounts when customers pay on time.
- Apply late payment fees for overdue payments. Over time, it'll discourage late or missed payments.
- Send payment reminders before the due date elapses to keep clients on track.
- Monitor accounts receivable regularly.
- Pause or adjust flexible credit for repeat late payers.
How do net terms help businesses manage cash flow?
Net terms allow buyers to accelerate cash flow while keeping payments predictable. They give businesses time to sell inventory or complete projects before funds are due.
What are the benefits of offering net payment terms?
Allowing buyers to pay over an extended period comes with the following benefits:
- Competitive advantage: Helps your business stand out by offering flexible trade credit that buyers have come to expect.
- Strengthens customer relationships: Builds customer loyalty by giving them time to manage their business cash flow without pressure.
- Increases order size: Buyers are more likely to place larger orders when payment is spread over time.
Final Thoughts on Flexible B2B Payment Options
Net payment terms turn cash flow constraints into opportunities for both buyers and sellers. Net 30 maintains tight control and rapid collections, while Net 60 and Net 90 unlock potential for substantial orders from established clients. To maximize benefits without the drawbacks, working with partners like Credit Key will ensure you receive payment on time so you can focus on managing your business without any worries.