Net 30 Terms Definitions
Net 30 terms is an example of credit terms used on an invoice. Net 30 terms or n/30 means that payment in full is due 30 days after the date of the invoice.
Net 30 terms are often combined with a discount for early settlement. For example 2% 10 days, net 30 terms or 2/10, n/30 means, that a 2% discount can be taken if payment is made with 10 days, otherwise the full amount is due within 30 days.
Net Terms Example
Suppose an invoice is issued for 1,000 1% 10 days, net 30. If paid within 10 days a discount of 1000 x 1% = 10 can be taken and the amount paid would be 1000 – 10 = 990. If paid after 10 days then the full amount of 1,000 would have to be paid. Under the net 30 terms and conditions, the invoice must be paid within 30 days.
Multiple step discounts
Variations in net 30 day terms exist to allow for multiple step discounts. For example, the invoice terms might be expressed at 3/10, 1/20, net 30, meaning that a 3% discount is available for payment within 10 days, a 1% discount is available for payment within 20 days, and the full amount must be paid within 30 days.
Other examples of common settlement terms
- Net 30 terms: Full amount due within 30 days, sometimes shown as n/30.
- Net 15 terms: Full amount due within 15 days, sometimes shown as n/15.
- Net 20 terms: Full amount due within 20 days, sometimes shown as n/20.
- Terms 2/10. n/30: 2% discount for settlement in 10 days, net 30 meaning the full amount is due within 30 days.
- Terms 1/10, n/30: 1% discount for settlement in 10 days, net 30 meaning the full amount is due within 30 days.
- Terms 5/10, 2/30, n/60: 5% for settlement within 10 days, 2% for settlement in 11-30 days, full amount due within 60 days.
- Net 30 Terms EOM: Payment is due in full 30 days after the end of the month (EOM) in which the invoice was issued.
About the Author
Chartered accountant Michael Brown is the founder and CEO of Double Entry Bookkeeping. He has worked as an accountant and consultant for more than 25 years in all types of industries. He has been the CFO or controller of both small and medium sized companies and has run small businesses of his own. He has been a manager and an auditor with Deloitte, a big 4 accountancy firm, and holds a BSc from Loughborough University.