# Payment Terms Explained: Net 30, Net 60, and Due on Receipt

> Payment terms explained: what net 30 payment terms mean, how net 60, due on receipt, EOM and 2/10 net 30 work, and how to choose terms for your invoices.
- **Author**: Deepak Jangir
- **Published**: 2026-10-03
- **Category**: Billing, Finance
- **URL**: https://dodopayments.com/blogs/en/payment-terms-net-30

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Payment terms tell a buyer when and how an invoice must be paid. Net 30 payment terms mean the full invoice amount is due 30 calendar days after the invoice date, so an invoice dated October 3 is due on November 2.

Net 60 stretches that window, due on receipt collapses it to zero, and terms like 2/10 net 30 add a discount for paying early. The terms you pick decide how long your cash sits with customers and how much chasing your team does.

## What Payment Terms Mean on an Invoice

Payment terms are the conditions a seller sets for settling an invoice. At minimum they state the deadline. Good terms also state the accepted payment methods, any early-payment discount, and what happens if the payment is late.

The deadline is usually expressed relative to a trigger date. For "net" terms the trigger is the invoice date, and "net" refers to the net amount, meaning the full balance after any credits or discounts already applied. Days are calendar days, not business days, unless the contract says otherwise.

A few examples, all using an invoice dated October 3, 2026:

- **Net 30:** due November 2, 2026.
- **Net 60:** due December 2, 2026.
- **Net 30 EOM:** the 30 days start at the end of the invoice month (October 31), so the invoice is due November 30.
- **15 MFI:** due on the 15th of the month following the invoice, so November 15.

If you have a signed order form or master services agreement, the terms written there govern, and the invoice should repeat them rather than introduce new ones.

## Common Payment Terms Compared

| Term | What it means | Typically used when |
| --- | --- | --- |
| Due on receipt | Payment is expected as soon as the invoice is received | Small one-off jobs, new customers, self-serve products |
| Net 7 / Net 10 | Full payment within 7 or 10 days of the invoice date | Freelancers, small agencies, short projects |
| Net 15 | Full payment within 15 days | Small B2B accounts that want a short grace period |
| Net 30 | Full payment within 30 days | The default for most B2B invoicing |
| Net 45 | Full payment within 45 days | Mid-market and larger companies with monthly payment runs |
| Net 60 | Full payment within 60 days | Enterprise buyers, distributors, longer procurement cycles |
| Net 90 | Full payment within 90 days | Large enterprises and some public sector buyers with strong negotiating power |
| EOM (end of month) | The payment window starts at the end of the invoice month | Buyers who batch all supplier payments monthly |
| 15 MFI | Due on the 15th of the month following the invoice | Similar to EOM, with a fixed mid-month pay date |
| 2/10 net 30 | 2% discount if paid within 10 days, otherwise full amount in 30 | Sellers who want faster cash and can afford the discount |
| PIA / CIA | Payment in advance / cash in advance, before work starts | New or higher-risk customers, custom work |
| CWO | Cash with order, paid when the order is placed | E-commerce and made-to-order goods |
| 50% upfront | Half on signing, balance on delivery or on a later date | Projects, implementations, and onboarding fees |

The more negotiating power the buyer has, the longer the window. The more risk the seller carries, the closer terms get to payment in advance.

## The 2/10 Net 30 Discount: Worked Example

"2/10 net 30" reads as: take a 2% discount if you pay within 10 days, otherwise pay the full amount within 30 days. It rewards fast payment without forcing it.

Worked example (illustrative numbers):

- Invoice amount: $10,000, dated October 3, 2026.
- Pay by October 13 (day 10): the buyer pays $9,800.
- Pay by November 2 (day 30): the buyer pays $10,000.

For the buyer, skipping the discount is equivalent to borrowing $9,800 for 20 extra days at a cost of $200.

The implied annualized cost of that choice is:

```text
Annualized cost = discount / (100 - discount) x 365 / (net days - discount days)
                = 2 / 98 x 365 / (30 - 10)
                = 0.020408 x 18.25
                = 0.3724, or about 37.2%
```

That is why well-funded buyers tend to take the discount, and why sellers should offer it carefully. A 2% discount is expensive financing: it makes sense when the cash is worth more to you than the margin, and little sense as a blanket default.

Also state whether the discount applies before or after tax, and decide in advance how you will handle a buyer who pays on day 25 and still deducts it.

## How Net 30 Payment Terms Affect Cash Flow and DSO

Every day of payment terms is a day of credit you extend to the customer. On net 30 payment terms you have already delivered the service, paid your own costs, and recognized the sale, but the cash has not arrived. That gap shows up in accounts receivable.

The standard way to measure it is days sales outstanding (DSO):

```text
DSO = (accounts receivable / revenue for the period) x days in the period
```

Worked example (illustrative numbers): a company bills $300,000 in a 90-day quarter and ends the quarter with $150,000 in open receivables. DSO is 150,000 / 300,000 x 90 = 45 days. If all its invoices are on net 30, a DSO of 45 means customers are paying, on average, about two weeks late.

Terms set the floor for DSO. You cannot run net 60 terms and expect a 30-day DSO. Our guide to [measuring and reducing DSO in SaaS](https://dodopayments.com/blogs/dso-days-sales-outstanding-saas) walks through benchmarks and levers, and the [SaaS accounts receivable guide](https://dodopayments.com/blogs/accounts-receivable-saas-guide) covers aging reports, collections workflows, and how to keep AR from quietly growing.

Longer terms also compound: moving customers from net 30 to net 60 permanently shifts roughly an extra month of their revenue into receivables for as long as they stay on those terms.

## How to Choose Payment Terms by Customer Type

There is no single right answer, but there is a sensible default for each segment.

| Customer type | Typical terms | Collection method |
| --- | --- | --- |
| Self-serve SaaS, consumers, prosumers | Due immediately, charged at checkout | Card or wallet on file, auto-charged each renewal |
| SMB B2B | Due immediately or net 15 | Card, ACH, or SEPA Direct Debit |
| Mid-market | Net 30 | Invoice with bank transfer or direct debit |
| Enterprise with procurement | Net 45 to net 90, often requested by the buyer | Invoice against a purchase order, paid in the buyer's payment run |
| New or unproven customer, custom work | Payment in advance or 50% upfront | Card or bank transfer before work starts |

**Self-serve SaaS.** Charge the card at checkout and on each renewal. Offering net terms to a customer who could have paid in ten seconds adds collection work for no gain.

**Mid-market.** Net 30 is the norm, and most finance teams at this size run payment cycles built around it.

**Enterprise.** Large buyers often have standard supplier terms of net 45, net 60, or longer, and procurement may push back on anything shorter. Treat terms as a negotiable part of the deal. A common trade is longer terms in exchange for annual prepayment, a longer commitment, or a price concession going the other way. If you do accept long terms, get the purchase order number and supplier onboarding done before the first invoice, since a missing PO number is one of the most common reasons an enterprise invoice sits unpaid.

Whatever you choose, apply it consistently per segment and write it into the order form.

## What to Write on the Invoice

A buyer's accounts payable team processes what is printed, not what was said on a sales call. Include:

- **The terms themselves**, written out: "Payment terms: Net 30".
- **An explicit due date**, such as "Due: November 2, 2026". Do not make the buyer calculate it.
- **The invoice date and a unique invoice number.** Our guide to [invoice numbering formats and rules](https://dodopayments.com/blogs/invoice-number) covers sequential numbering and why gaps cause problems.
- **Accepted payment methods and remittance details**, such as bank details, a payment link, or direct debit instructions.
- **Any early-payment discount**, with its deadline and the discounted amount.
- **Your late payment policy**, including any interest or fee, stated in the same terms as the contract.
- **The buyer's PO number**, if they issued one.

It also helps to be clear about which document you are sending. An invoice requests payment and a receipt confirms it, and mixing them up leads to double payments and confused reconciliation. The difference is covered in [invoice vs receipt](https://dodopayments.com/blogs/invoice-vs-receipt). When a buyer pays, ask for a [remittance advice](https://dodopayments.com/blogs/remittance-advice-guide-templates) so you can match the payment to the right invoice quickly, and if an invoice needs correcting after it is issued, use a [credit memo](https://dodopayments.com/blogs/credit-memo) rather than editing or deleting the original.

## Late Payments: Reminders, Fees, and Escalation

Most late payments are process failures, such as a wrong inbox or a missing PO number, and a structured reminder sequence resolves most of them.

```mermaid
flowchart LR
  A["Invoice sent (net 30)"] --> B["Reminder before due date"]
  B --> C["Due date"]
  C --> D["Reminder: 1-7 days overdue"]
  D --> E["Late fee or interest per contract"]
  E --> F["Escalation: pause service or collections"]
```

A reasonable sequence for net 30 invoices: a reminder with the payment link a few days before the due date, a second one to both the contact and accounts payable shortly after it, a direct message from the account owner at around two weeks overdue, and only then late fees, a service pause, or formal collections. For ready-to-send wording at each step, use these [overdue invoice dunning letter templates](https://dodopayments.com/blogs/dunning-letter).

**Late payment fees and interest.** Only charge what your contract allows and local law permits. Rules vary by jurisdiction, so get local legal advice before adding penalties.

In the EU, the Late Payment Directive (Directive 2011/7/EU) sets the baseline for B2B transactions. Contractual payment periods between businesses should not exceed 60 calendar days unless expressly agreed and not grossly unfair to the creditor. If no payment period is fixed in the contract, interest becomes payable 30 calendar days after the buyer receives the invoice. Statutory interest is at least 8 percentage points above the reference rate, and the creditor can also claim a flat EUR 40 as compensation for recovery costs. For payments owed by public authorities the default limit is 30 days, extendable to 60 only in specific cases. Each member state transposes the directive into its own national law, so check the local rules for the countries you invoice.

The broader process that ties quoting, invoicing, and collecting together is covered in our guide to the [order-to-cash process](https://dodopayments.com/blogs/order-to-cash-process).

## Payment Terms for Subscriptions vs One-Off Invoices

Payment terms behave differently once billing is recurring.

With one-off invoices, each invoice is a separate collection task. With subscriptions, the terms apply to every renewal, so net 30 on a monthly subscription means the next invoice is issued around the time the previous one becomes due, so a customer who pays a week late is permanently one invoice behind.

Most self-serve subscriptions avoid this entirely by charging a stored payment method at the start of each period. The billing cycle determines when the charge happens, and the customer never sees "net" terms at all. Our explainer on [how billing cycles work](https://dodopayments.com/blogs/billing-cycle) covers anniversary vs calendar billing and proration, and the [recurring payments guide](https://dodopayments.com/blogs/recurring-payments-guide) covers the mechanics of charging a card, wallet, or bank account on a schedule.

The trade-off is that failed payments replace late payments: a card expires or a bank declines for insufficient funds, and the renewal fails. The fix is to retry soft declines, email the customer, and make updating the payment method easy. A well-designed [subscription dunning recovery sequence](https://dodopayments.com/blogs/subscription-dunning-recovery-sequence) does for subscriptions what reminder emails do for net 30 invoices, and [payment retry logic](https://dodopayments.com/blogs/payment-retry-logic) decides when a second attempt is worth making.

## How Dodo Payments Fits

Dodo Payments is built around collecting payment at checkout rather than extending credit. Customers pay by card, wallet, or bank debit (including ACH Direct Debit in the US and SEPA Direct Debit in Europe) when they buy or subscribe, and subscriptions renew automatically on the schedule you set. For most self-serve SaaS and digital products, that means you effectively run "due on receipt" terms without writing them anywhere.

Paperwork is handled for you. An invoice is [generated automatically for every successful transaction](https://docs.dodopayments.com/features/invoice-generation), covering one-time purchases and every subscription renewal, with tax breakdown and customer and product details. Customers can download invoices from the [Customer Portal](https://docs.dodopayments.com/features/customer-portal), and B2B buyers can enter a business tax ID at checkout so it appears on their invoice. Payments are created through [checkout sessions](https://docs.dodopayments.com/developer-resources/checkout-session), the recommended integration path for both payments and subscriptions.

When a renewal fails, the subscription moves to on hold (or past due, if you configure a grace period). [Subscription dunning](https://docs.dodopayments.com/features/recovery/subscription-dunning) sends up to four emails asking the customer to update their payment method, and [payment retries](https://docs.dodopayments.com/features/recovery/payment-retries) automatically retry soft declines. Once the customer updates their details, Dodo charges the remaining dues, generates an invoice, and reactivates the subscription. Recovery is free to enable, with 5% charged only on recovered revenue.

As Merchant of Record, Dodo is the legal seller and handles VAT, GST, and sales tax on those payments. For more on selling to businesses, see our overview of [B2B payments](https://dodopayments.com/blogs/b2b-payments).

## FAQ

### What does net 30 mean on an invoice?

Net 30 means the full invoice amount is due within 30 calendar days of the invoice date. An invoice dated October 3 with net 30 terms is due on November 2, unless the contract defines a different trigger date, such as the date the invoice was received.

### Is net 30 counted in business days or calendar days?

Net terms are counted in calendar days by default, including weekends and public holidays. If the due date lands on a non-business day, many buyers pay on the next business day, so state the exact due date on the invoice to avoid disagreement.

### Should a small business offer net 60 or net 90 terms?

Only when the customer's procurement process requires it and your cash position can absorb the wait. Longer terms tie up working capital for the whole relationship, so ask for something in return, such as an annual commitment.

### What is the difference between due on receipt and payment in advance?

Due on receipt means payment is expected as soon as the invoice arrives, usually after the work is delivered. Payment in advance means the customer pays before any work starts or before access is granted, which removes collection risk for the seller entirely.

### Can I charge a late fee on an overdue invoice?

Generally only if the fee or interest rate was agreed in the contract or is allowed by local law, and the rules differ by country and state. In EU B2B transactions, the Late Payment Directive allows statutory interest and a flat EUR 40 recovery fee, but you should confirm the national rules that apply to your customer.

## Conclusion

Payment terms are a cash flow decision disguised as a line on an invoice. Net 30 payment terms are the sensible default for mid-market B2B, due on receipt fits self-serve products, and longer terms like net 60 or net 90 should be a negotiated concession rather than a habit. Offer early-payment discounts such as 2/10 net 30 only when you understand that the implied cost is roughly 37% a year.

Whichever terms you choose, write them into the contract, print the exact due date on every invoice, and run a consistent reminder process. For subscriptions, the better answer is usually to skip net terms altogether and collect automatically at each renewal, with dunning and retries handling the failures. [Dodo Payments](https://dodopayments.com) does that out of the box, with automatic invoices for every payment and tax handled as Merchant of Record. See [Dodo Payments pricing](https://dodopayments.com/pricing) for the details.
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