Net 30 Payment Terms

Net 30 payment terms mean that clients have 30 days from the invoice date to pay the invoice in full. It's one of the most common payment terms in B2B business, representing the standard expectation that businesses pay their vendors within a month. The "net" indicates the full amount is due (not a discount), and the number indicates the payment period. Other common terms include Net 15 (15 days), Net 45 (45 days), and Net 60 (60 days), with shorter terms generally better for vendor cash flow. Payment terms significantly impact agency cash flow. With Net 30 terms, if you invoice on the first of the month, you might not receive payment until the end of the month or later (some clients pay on the last day of the term). This creates a cash flow gap where you've incurred costs (payroll, vendor payments) but haven't received client payment yet. For agencies with tight cash flow or high costs, this gap can be problematic, which is why many agencies prefer Net 15 or even Net 10 terms. The choice of payment terms involves balancing several factors. Shorter terms (Net 15 or Net 10) improve your cash flow by getting paid faster. But they may be less competitive if clients expect Net 30, and they can create friction if clients aren't set up for faster payment cycles. Longer terms (Net 45 or Net 60) may be more attractive to clients but worsen your cash flow. The key is finding terms that work for your business while remaining competitive. Many agencies use different payment terms for different situations. New clients might get Net 15 terms until they establish payment history, then move to Net 30. Large clients with established relationships might negotiate Net 45 or Net 60. Retainer clients might pay in advance (Net 0 or prepaid). Project-based work might use milestone payments rather than Net terms. The important thing is having clear, consistent terms that are communicated upfront. Payment terms should be clearly stated in contracts, proposals, and invoices. They should also include late payment policies—what happens if payment is late. Many agencies charge late fees (typically 1.5% per month) or interest on overdue amounts. Some agencies offer early payment discounts (like 2/10 Net 30, meaning 2% discount if paid within 10 days, otherwise Net 30) to incentivize faster payment. Common mistakes include not enforcing payment terms (letting clients pay whenever they want), not communicating terms clearly (leading to confusion and delayed payment), using terms that don't match your cash flow needs (creating unnecessary cash flow gaps), and not following up on overdue invoices promptly (allowing payment delays to extend). The most successful agencies have clear payment policies, communicate them upfront, enforce them consistently, and follow up promptly on overdue payments.