Net payment terms are a vital part of B2B commerce, giving buyers the flexibility to manage their cash flow and helping wholesale distributors stay competitive. Of all the net terms available, Net 30 remains the most widely offered and financially sustainable payment term.
For both merchants and buyers, understanding how net terms work (and knowing when to offer or accept them), can make a big difference in liquidity, customer relationships, and overall financial flexibility.
In this article, we’ll break down what Net 30, Net 60, and Net 90 payment terms mean in practice.
What are net payment terms?
Net payment terms are a type of short-term credit agreement that allows a buyer to receive goods or services up front and pay for them later. Payment is made within a fixed number of days after the invoice date.
These terms are commonly used in B2B transactions, especially among wholesalers, manufacturers, and large institutions that purchase inventory or supplies on a regular basis. The most common net terms you'll see mentioned are Net 30, Net 60, and Net 90.
For B2B buyers, the biggest advantage of net payment terms is flexibility. Being able to delay payments between 30 and 90 days gives them time to sell stock, receive incoming payments, or simply balance their books without draining their cash reserves. This is especially valuable for buyers such as schools, hospitals, and government agencies that tend to operate with tight procurement cycles and budget approvals.
As a wholesale distributor, net terms can make your business more attractive to these high-volume customers who might otherwise go elsewhere for more favorable payment options. In industries where net payment terms are expected, not offering them could mean losing valuable business to competitors.
When managed well, net payment terms are a tool for building customer trust and loyalty, signaling that you believe in a customer’s ability to pay, and want to support their long-term growth. That said, offering these terms also requires careful risk management.
Here’s a breakdown of the key advantages and challenges to consider:
Pros of offering net payment terms
- Attracts more buyers - Many institutional and B2B buyers expect net terms. Offering them helps you win new and repeat business from customers who require more payment flexibility.
- Increases average order value - When buyers aren’t limited by immediate payment requirements, they’re more likely to place larger orders and purchase more frequently.
- Builds long-term B2B relationships - Offering terms communicates trust by showing that you’re invested in your customer’s success, not just in the transaction.
- Competitive advantage - If your competitors don’t offer net terms, you can differentiate your business by making purchasing easier and more flexible.
Cons of offering net payment terms
- Cash flow delays - Waiting 30, 60, or 90 days to get paid can put pressure on your operating capital, especially if your major outgoings are due sooner.
- Risk of late or missed payments - Not all customers pay on time. A report by Atradius revealed an upward trend of late payments, with 55% of all B2B invoiced sales being overdue, and bad debts affecting an average 9% of all credit-based B2B sales. Without strong credit evaluation or collections processes, you could end up writing off invoices or wasting valuable time chasing down late payments.
- Complex administration - Managing approvals, sending invoices, tracking aging receivables, and handling collections can become a burden, especially as you scale.
- Credit exposure - If you’re offering net payment terms directly, you’re taking on the full risk of buyer default. The risk compounds when you offer net terms to multiple customers at once. This is where third-party financial solutions like Credit Key can be beneficial, as they allow merchants to offer net payment terms confidently, without having to bear any of the payment risk.
Commonly used net payment terms
Net payment terms may look similar on paper, but each option has different implications for both merchants and buyers. Understanding the trade-offs of each one can help businesses on each side of the transaction make more strategic decisions.
Net 30 payment terms
This is the most common and widely accepted form of net terms in B2B commerce. Under Net 30, the buyer must pay the full invoice amount within 30 calendar days of the invoice date.
For buyers, these terms offer short-term flexibility without encouraging long-term debt. Merchants prefer Net 30 because it supports healthy cash flow and limits risk exposure.
Net 60 payment terms
Net 60 extends the payment window to 60 days after the invoice date. This provides additional time for buyers to collect the necessary funds for payment, which is useful if they have more cyclic or seasonal revenue, or if they are making larger purchases. For sellers, Net 60 can tie up capital for longer and delay their accounts receivable turnover.
Net 90 payment terms
With Net 90, the buyer has a full three months to pay — 90 days from the invoice date. These net payment terms are typically used in industries that need to make large, bulk purchases, or in smaller businesses who need longer payment windows. The extended payment period can help B2B buyers to align payments with their budgeting cycles and broader financial planning.
On the flipside, Net 90 significantly delays cash flow for merchants, and it increases the risk of late or missed payments from borrowers.
Net 10 and net 15 payment terms
Merchants can also offer shorter net terms where payment is due within 10 or 15 days of the invoice date. These terms aren’t as common, but some wholesale distributors might offer shorter terms such as Net 10 or Net 15 if they need to accelerate cash flow, or if the goods or services they provide can be quickly resold by purchasers.
Net payment terms vs credit cards
Net payment terms and credit cards both give businesses a way to delay payment, but they’re built for different use cases. Choosing the right one can make a meaningful impact on cash flow, operational efficiency, and purchasing power.
Net payment terms are designed specifically for B2B transactions. There is typically no interest or fees during that period, making it a cost-effective way for both parties to manage their working capital.
Credit cards, on the other hand, are general-purpose financing tools. They can be used across a wide variety of merchants and services, and they often come with interest rates, fees, and credit limits that are tied to personal or business creditworthiness. While they offer flexibility and convenience, especially for online purchases or smaller transactions, credit cards are not always optimized for larger volumes of B2B procurement.
For example, with a credit card APR of 20%, carrying a $10,000 balance for 30 days might cost a buyer $165 in interest, whereas Net 30 through a B2B financial partner like Credit Key carries no interest if a buyer pays on time.
Why Net 30 is the smart option for many B2B transactions
Net 30 terms are especially well-suited for organizations that need purchasing flexibility, but who might face barriers when applying for traditional credit, such as requiring a business owner’s personal guarantee or undergoing lengthy approval processes.
Institutional buyers like schools, hospitals, and government agencies often operate with strict procurement guidelines and budget cycles. These entities rarely have an “owner” who can personally apply for financing, and they typically rely on vendor relationships that accommodate their internal workflows. Net 30 offers these B2B buyers a manageable and predictable timeline, without locking them into revolving debt or credit lines they can’t access.
Large enterprises with centralized purchasing departments and procurement teams also benefit from Net 30. These companies often need quick approvals, clear payment terms, and minimal friction in the buying process. Offering Net 30 can make your business a more attractive vendor for these customers, especially if your competitors only accept immediate payment or offer more rigid financing options.
Tips for managing net payment terms as a merchant
Offering net payment terms can drive growth, but managing them effectively requires structure, discipline, and the right tools. Without a plan, even short term lengths can turn into overdue invoices and cash flow headaches.
Here are some tips to ensure you stay in control while keeping your B2B customers happy.
Set clear payment expectations upfront
Spell out your net terms clearly on every quote, invoice, and purchase order. Be explicit about late fees, penalties, or actions taken in the case of non-payment. The more transparent you are, the fewer disputes you’ll face.
Screen buyers before extending credit
Not every customer should be offered net payment terms. Evaluate buyer risk using credit checks, payment history, trade references, or a trusted underwriting solution. Third party payment partners like Credit Key can handle this upfront screening for you and ensure your buyers meet a baseline of creditworthiness.
Automate invoicing and reminders
Use invoicing software or an ERP system to send invoices promptly and automate payment reminders. Automation helps you stay consistent and professional while reducing your admin time.
Monitor accounts receivable closely
Flag your aging invoices early. The longer an invoice goes unpaid, the less likely it is to be collected. Set internal benchmarks and follow up proactively before your payments become overdue.
Have a collections process in place
Establish a firm yet respectful collections protocol. Send follow-up messages at set intervals, escalate when needed, and don’t hesitate to pause net payment terms for repeat offenders. Consistency is key to protecting your cash flow.
Consider outsourcing your net 30 program
Managing net terms in-house can strain your team, especially as you scale. Solutions like Credit Key enable you to offer Net 30 without taking on the credit risk or backend workload — so you can get paid up front while Credit Key handles the credit approval and repayment side of things.
How Credit Key makes Net 30 easy
Credit Key takes the complexity out of offering and managing Net 30 terms, making it simple for you to extend flexible payment options, and just as simple for your buyers to access them.
Instead of waiting 30 days (or more!) to get paid, you receive full payment from Credit Key within 48 hours when a customer makes a purchase from you. There is no impact on your cash flow, no need to manage collections, and no exposure to non-payment risk. Credit Key handles the underwriting, billing, and follow-ups, so you can focus on growing your business, not chasing down invoices.
For borrowers, the experience is just as seamless. Applying for Net 30 through Credit Key is fast, digital, and doesn’t require a personal guarantee from a business owner. This makes it accessible for institutions and larger companies where owner-level involvement isn’t feasible.
Once approved, your buyers can use Credit Key at checkout to complete purchases immediately with a line of credit up to $50,000, then pay off their balance within 30 days with no interest or hidden fees.
By simplifying and securing the Net 30 experience for both sides of a transaction, Credit Key helps businesses close more sales, build stronger relationships, and operate with greater financial confidence. Learn how to offer Net 30 and Buy Now Pay Later here.
Topics from this blog: B2B Payments