Gautham Srinivas · Last updated 1 September 2026 · 6 min read
Net 30 Payment Terms: What They Really Cost a Small Brand
tl;dr
Net 30 means payment is due thirty days after the invoice date. You have made the stock, paid for it, and shipped it. Now you wait a month. That is a loan, and you are the bank. Take payment before dispatch on a first order, agree when the clock starts, and stop shipping before the balance grows.
What net 30 means
The full invoice is due thirty days after the invoice date.
Net 60 and net 90 are the same idea with longer windows. Bigger retailers tend to set those rather than negotiate them.
You will also see 2/10 net 30. That means take two percent off if you pay within ten days, otherwise pay in full at thirty.
You are lending the shop money
This is the part that gets skipped.
You paid to make the stock. You paid to ship it. You handed it over.
For the next thirty days they have your inventory and you have a piece of paper.
If it sells in week two, they are selling goods they have not paid for, and holding your cash while they do it.
There is a whole economics literature on this, and it is not flattering. Petersen and Rajan found that small firms lean hardest on trade credit precisely when bank credit is closed to them, and that suppliers extend it because they know the buyer better than a bank does and can repossess more easily.
Read that from where you are standing. You are the supplier. You are the bank of last resort.
Agree when the clock starts
Thirty days from what?
Invoice date, dispatch date, delivery date, or the date they received a correct invoice. All four are used in practice.
A large retailer will usually specify the last one, because it is the latest, and because a disputed invoice restarts it.
Say it in your terms. Thirty days from invoice date is simplest, because it is the one date you control.
Do not offer terms on a first order
Payment before dispatch on order one. Terms once they have reordered.
That is a completely normal position. No reasonable buyer is offended by it, and plenty of small brands run it permanently with independents.
It also filters for you. A shop that will not pay for a first order but wants thirty days has told you something about their cash position.
Better to learn that before your stock is on their shelf.
Put a late position in writing
Not because you will send lawyers on day thirty five.
Because it gives you something calm to point at when an invoice hits sixty.
A stated interest or late fee, plus a line saying further orders ship once the account is current. That is enough.
The second half is the one that actually works. No new stock until the last invoice is paid.
When they just do not pay
Chase early and unemotionally.
Send it to whoever processes payments, not the buyer who placed the order. In a small business the invoice is usually lost, not refused.
Then stop shipping before the balance grows.
Brands almost never get hurt by chasing too hard. They get hurt by continuing to supply an account that is already behind.
Questions
- What does net 30 mean in simple terms?
- The buyer has thirty days from the invoice date to pay in full. You ship now and get paid later, so you carry the cost of the stock in between.
- Should a small brand offer net 30?
- Not on a first order. Payment before dispatch to start, then terms once the account has reordered and you know they pay. It costs almost no goodwill and removes most of the risk.
- When does the thirty days actually start?
- Whenever your terms say, which is exactly why you should say. Invoice date is cleanest because you control it. Large retailers often specify receipt of a correct invoice, which can be a lot later than dispatch.
- What is 2/10 net 30?
- Two percent off if they pay within ten days, full amount at thirty. It is you buying your own cash back early. Whether two percent is worth it depends on how tight your working capital is.
Sources
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