What is net 60?

Net 60 means the customer has 60 days to pay for their goods or services before the bill is past due.

How does net 60 work?

Vendors often have standard net payment terms such as net 30 or net 60 for customers as trade credit unless they require payment up front. Suppliers can mandate net terms with an early payment discount. The number of days is calendar days, not business days. The net 60 payment term due date includes weekends and holidays as well as business days.

Who does net 60 benefit?

Net 60 benefits small businesses, larger companies purchasing products and services, and suppliers. If the supplier’s cash flow allows for accounts receivable for 60 days, offering net 60 terms can give vendors a competitive advantage in winning new customers.

Customers improve their cash flow when they aren’t required to pay invoices for 60 days. Customers who pay invoices on time:

• Strengthen supplier relationships
• Build and maintain good business credit scores
• Avoid late fees or interest charges on past due invoices
• Ensure continued shipments of inventory by vendors when needed

Are net 60 payment terms common?

Net 60 payments are common compared to net 30 and net 90 payment options, though net 60 is usually for larger businesses that can afford longer payment terms. Any business should define the due date for a net 60 payment as some companies might count the number of days from when an invoice was created, completed, or emailed. Payment details should be shared upfront so all parties agree on the invoice date and have the same expectations.

When should a business use net terms?

If a business requires their full invoice amount to be paid as soon as possible, offering net terms may not make sense. Unfortunately for them, customers may expect net terms due to industry norms.