Payment terms are the conditions on an invoice that tell the customer when to pay and on what terms. "Net 30" means the full invoice amount is due 30 days after the invoice date.
The word "net" in this sense has nothing to do with tax. It does not mean "net of VAT". It means the full amount, with no discount taken. That is why terms like 2/10 net 30 exist: they combine an early-payment discount with the full amount due at the end of the period.
The common payment terms at a glance
| Term | What it means | Typical use |
|---|---|---|
| Due on receipt | Pay as soon as the invoice arrives | One-off jobs, new customers, small amounts |
| Payment in advance | Pay before the work starts or the goods ship | Custom orders, deposits |
| Net 7 | Full amount due 7 days after the invoice date | Freelancers, trades, short jobs |
| Net 15 | Full amount due after 15 days | Small B2B orders |
| Net 30 | Full amount due after 30 days | The default in most B2B trade |
| Net 60 | Full amount due after 60 days | Larger customers, wholesale |
| Net 90 | Full amount due after 90 days | Big corporate buyers, some public contracts |
| EOM (end of month) | Due at the end of the month the invoice was issued in | Customers who pay in monthly runs |
| Net 30 EOM | Due 30 days after the end of the invoice month | Monthly payment runs with a grace period |
| 1/10 net 30 | 1% discount if paid within 10 days, otherwise full amount after 30 | Mild incentive for fast payment |
| 2/10 net 30 | 2% discount if paid within 10 days, otherwise full amount after 30 | The classic early-payment discount |
A term on its own is shorthand. What your customer actually needs is a date. Write the due date on the invoice as a calendar date, next to the term. "Net 30" leaves room for argument about where the 30 days start. "Due 2 September 2026" does not.
Worked examples: from invoice date to due date
Take an invoice dated Monday, 3 August 2026. Counting starts on the day after the invoice date, so day 1 is 4 August.
| Term | Due date | Weekday |
|---|---|---|
| Net 15 | 18 August 2026 | Tuesday |
| Net 30 | 2 September 2026 | Wednesday |
| Net 45 | 17 September 2026 | Thursday |
| Net 60 | 2 October 2026 | Friday |
| Net 90 | 1 November 2026 | Sunday |
| Net 30 EOM | 30 September 2026 | Wednesday |
| 2/10 net 30 | discount until 13 August, full amount by 2 September | Thursday / Wednesday |
Three things in this table cause most of the disputes:
- Net 90 lands on a Sunday. Whether the deadline moves to Monday depends on your contract and on national law. In Germany, for example, a deadline that ends on a Saturday, Sunday or public holiday moves to the next working day. If you want certainty, state the date.
- Invoice date or receipt date. Most invoices count from the invoice date. EU law, where no date is agreed, counts from the day the customer receives the invoice (more on that below). An invoice e-mailed the same day removes the gap.
- Calendar days, not working days. Net terms count every day, weekends and holidays included, unless the contract explicitly says "working days". Thirty working days is roughly six weeks, which is a very different promise.
The payment due date calculator does this counting for you: enter the invoice date, pick Net 15, 30, 60, 90 or a custom number of days, and it returns the due date.
2/10 net 30: what the early-payment discount really costs
On a €4,800 invoice dated 3 August under 2/10 net 30, the customer can pay €4,704 by 13 August or €4,800 by 2 September. The €96 difference looks small. It is not.
From the customer's side, paying 20 days early earns €96 on €4,704, which is 2.04% for 20 days. Scaled to a year, that is a return very few investments offer. From your side, it is what you pay to get your money 20 days sooner.
The standard formula for the annualised cost of a cash discount:
Annual cost = discount % / (100 − discount %) × 365 / (net days − discount days)
For 2/10 net 30: 2 / 98 × 365 / 20 = 37.2% a year (simple interest; about 44.6% if you compound it).
| Terms | Discount window | Annualised cost (simple) |
|---|---|---|
| 1/10 net 30 | 20 days early | 18.4% |
| 2/10 net 30 | 20 days early | 37.2% |
| 3/10 net 30 | 20 days early | 56.4% |
| 1/15 net 45 | 30 days early | 12.3% |
| 2/10 net 60 | 50 days early | 14.9% |
What follows from these numbers:
- For a customer with cash in the bank, taking a 2/10 discount is almost always the right move. Expect it to be taken.
- For you, 2/10 net 30 is expensive money. If your overdraft or credit line is cheaper, the discount is a gift. It makes sense when cash in hand matters more than the price, or when you cannot get credit at all.
- Decide in advance what happens when a customer deducts the discount on day 14: accept it, which turns your terms into 2/14, or invoice the difference. Consistency matters more than the answer.
What the law says in the EU
Within the EU, payment terms between businesses are shaped by the Late Payment Directive (Directive 2011/7/EU), which every member state has transposed into national law. The core rules:
| Rule | What the directive says |
|---|---|
| No payment date agreed | Interest for late payment is due after 30 calendar days from receipt of the invoice (or of the goods or services, in certain cases) |
| B2B contract terms | Payment periods over 60 calendar days only if expressly agreed and not grossly unfair to the creditor |
| Public authorities as customers | 30 calendar days, extendable to at most 60 only for certain public undertakings and public healthcare |
| Statutory interest | At least the reference rate plus 8 percentage points (the ECB rate for euro countries) |
| Recovery costs | A fixed sum of at least €40 per late payment |
| Reminder needed? | No. Interest and the €40 are due without a reminder |
National law can go further. Germany, for example, sets the B2B late-payment interest at 9 percentage points above the base rate and grants the €40 flat fee. The UK, outside the EU, has its own statute: 8% over the Bank of England base rate for business-to-business debts, plus a fixed £40, £70 or £100 depending on the size of the debt.
These rules cover business customers. Consumer contracts follow different rules in each country, so check your national law before you apply interest or fees to private customers.
How to choose your terms
Match terms to your cash cycle: if you pay suppliers in 14 days and customers pay you in 60, you are financing them. Give new customers shorter terms or ask for a deposit, and extend once they have paid on time. Clear terms are only half the job. The other half is noticing, the day after the due date, that the money has not arrived. What happens next, and what it costs, is covered in what happens when an invoice goes unpaid.
Keeping track of every due date
A calculator answers one invoice. Once you send dozens a month, the due dates need to live where the invoices live. In CRM Business Hub, every invoice carries its due date, overdue invoices are visible at a glance, and payment reminders can go out without anyone keeping a list. It runs inside your KIMISUITE workspace, billed per workspace rather than per user. Cancel anytime · No minimum term · 14 days free.
