A net 30 account lets you buy goods or services now and pay the invoice 30 days later
A net 30 account is a trade credit arrangement between a business and a supplier. You receive the goods or services immediately, and the supplier sends you an invoice. You then have 30 calendar days from the invoice date to pay the full amount. No interest accrues during those 30 days if you pay on time.
Net 30 is the most common payment term in business-to-business transactions. Suppliers offer it to establish trust with new customers and to keep cash flowing without requiring upfront payment. For the buyer, it provides a short-term cash flow buffer—you can sell the goods you purchased before you have to pay for them.
The term "net 30" appears on invoices as a shorthand. You might also see "Net 30 days" or simply "N/30". The clock starts on the invoice date, not the delivery date, though some suppliers specify otherwise in their terms.
Key Takeaways
- Net 30 means you pay the full invoice amount within 30 calendar days of the invoice date, with no interest charged if you pay on time.
- Net 30 accounts are offered by suppliers to businesses, not typically to individual consumers, and require a credit application and approval process.
- Late payment on a net 30 account can result in late fees, interest charges, or loss of the account, and may be reported to credit bureaus.
- Other common net terms include net 15 (15 days), net 60 (60 days), and net 90 (90 days), depending on the supplier and industry.
- A net 30 account is different from a credit card because the supplier extends credit directly to your business, not through a third-party lender.
How to set up a net 30 account with a supplier
To open a net 30 account, contact the supplier's sales or credit department and request a credit application. The supplier will ask for basic business information: your legal business name, tax ID or EIN, business address, and the name and contact details of the owner or authorized buyer.
Most suppliers also request trade references—the names and contact information of other suppliers you have paid on time. They may call these references to verify your payment history. Some suppliers run a credit check through a business credit bureau like Dun & Bradstreet or Experian Business. The approval process typically takes three to seven business days.
Once approved, you receive account terms in writing. These specify the net 30 period, any early-payment discounts (such as 2/10, meaning 2% off if you pay within 10 days), late fees, and the maximum credit limit. Keep these terms on file because they govern what you owe and when.
What happens if you pay late on a net 30 account
If you do not pay by day 30, the invoice becomes past due. Most suppliers charge a late fee—typically 1% to 2% of the invoice amount per month, though this varies. Some charge a flat fee instead. The supplier may also begin charging interest at a rate specified in your account terms.
A single late payment may not immediately close your account, but repeated late payments will. Suppliers can suspend your account, requiring payment in full before you can place new orders. They can also report the delinquency to business credit bureaus, which damages your business credit score and makes it harder to open accounts with other suppliers.
If an invoice goes unpaid for 60 to 90 days, the supplier may send it to a collection agency or pursue legal action. At that point, you may face court costs and attorney fees in addition to the original debt.
Net 30 versus other payment terms
Suppliers offer different net terms depending on the industry, the size of the order, and the buyer's creditworthiness. Net 15 gives you 15 days to pay and is common for smaller orders or new customers. Net 60 and Net 90 extend the payment window to 60 or 90 days and are typically offered to established customers with strong payment histories or for large orders.
2/10 Net 30 means you receive a 2% discount if you pay within 10 days, but you have until day 30 to pay the full amount without penalty. This incentivizes early payment and helps suppliers manage cash flow. COD (cash on delivery) and prepayment are the opposite—you pay before or when the goods arrive, with no credit period.
The table below shows how these terms compare:
| Term | Payment Window | Common Use |
|---|---|---|
| Net 15 | 15 days from invoice date | Small orders, new customers |
| Net 30 | 30 days from invoice date | Standard business purchases |
| 2/10 Net 30 | 2% discount if paid by day 10; full payment by day 30 | Incentivizes early payment |
| Net 60 | 60 days from invoice date | Large orders, established customers |
| Net 90 | 90 days from invoice date | Very large orders, strong credit history |
| COD | Payment due on delivery | New or high-risk customers |
How net 30 accounts affect your business cash flow
A net 30 account creates a timing advantage if your business sells products quickly. For example, if you buy inventory on net 30 and sell it within two weeks, you can use the revenue from those sales to pay the supplier invoice before it is due. This reduces the amount of cash you need to keep on hand.
However, if your sales cycle is longer than 30 days, a net 30 account can strain cash flow. You may need to borrow money or use a line of credit to cover the invoice while waiting for customer payments. Managing multiple net 30 accounts requires tracking invoice dates and payment due dates carefully to avoid late fees and account suspension.
Many businesses use accounting software to track net 30 invoices automatically. The software alerts you when payment is due and can generate reports showing which invoices are outstanding and which are past due.
Net 30 accounts and business credit
Payment history on net 30 accounts is reported to business credit bureaus and affects your business credit score. Paying on time builds a strong credit history, which makes it easier to open accounts with other suppliers and to borrow money at better rates. Missed or late payments damage your score and can follow your business for years.
Business credit is separate from personal credit. Even if your personal credit is excellent, your business credit score starts at zero and must be built through on-time payments on business accounts. Conversely, a strong business credit history does not automatically improve your personal credit.
If you are just starting a business, you may not be approved for net 30 accounts immediately. Some suppliers require a minimum time in business (often six months to a year) or personal credit history before extending trade credit. Once you have established a track record, opening net 30 accounts becomes easier.
Frequently Asked Questions
Can I negotiate net 30 terms with a supplier?
Yes. If you are a large customer or have a strong payment history, you can ask for net 30 terms or request a longer payment window. Suppliers are often willing to negotiate, especially if you commit to regular orders. Start by asking what terms they offer for customers in your situation.
What is the difference between net 30 and a credit card?
With net 30, the supplier extends credit directly to your business. With a credit card, a bank or card issuer extends credit, and you pay them back with interest if you carry a balance. Net 30 has no interest if you pay on time; credit cards charge interest on unpaid balances.
Do I need a business license to open a net 30 account?
Most suppliers require proof that you operate a legitimate business, but this does not always mean a formal license. A tax ID, business bank account, or business registration may be sufficient. Requirements vary by supplier and industry.
What happens if I dispute an invoice on a net 30 account?
Contact the supplier in writing before the due date and explain the issue. Most suppliers will work with you to resolve discrepancies, but you may still owe the undisputed portion by day 30. Do not ignore the invoice—communicate the problem and propose a solution.
Can I pay a net 30 invoice early?
Yes. Paying early is always allowed and may earn you an early-payment discount if your terms include one (such as 2/10). Paying early improves your relationship with the supplier and frees up their capital, so most suppliers welcome it.