Payment Terms Glossary
for B2B Finance Teams
A complete reference for the payment terms you'll see on invoices, in contracts, and across B2B billing. Understand what each term means, when to use it, and how your choice of payment terms impacts cash flow, DSO, and collections.
What Are Payment Terms?
Payment terms are the conditions on an invoice or contract that specify when a buyer must pay a seller. They define the payment window (e.g., 30 days), any early payment discounts, and penalties for late payment.
The most common B2B payment term is Net 30, used on approximately 45% of B2B invoices according to the PYMNTS B2B Payments Report. Other widely used terms include Net 15, Net 60, 2/10 Net 30, and Due on Receipt.
Common B2B Payment Terms
Each term defines when payment is due, and some include incentives for early payment. Here's what each one means in practice.
Net 30
Full guidePayment is due within 30 days of the invoice date. The most common B2B payment term, used widely in SaaS, professional services, and enterprise contracts.
Example: "Net 30" on an invoice dated March 1 means payment is due by March 31.
Net 15
Full guidePayment is due within 15 days of the invoice date. Used when vendors need faster cash flow or when the buyer-seller relationship supports shorter cycles.
Example: "Net 15" on an invoice dated March 1 means payment is due by March 16.
Net 60
Payment is due within 60 days of the invoice date. Common in enterprise and government contracts where procurement cycles are longer.
Example: "Net 60" on an invoice dated January 1 means payment is due by March 2.
Net 90
Payment is due within 90 days of the invoice date. Typically seen in large enterprise deals, government contracting, and industries with extended procurement processes.
Example: "Net 90" on an invoice dated January 1 means payment is due by April 1.
2/10 Net 30
Full guideThe buyer receives a 2% discount if they pay within 10 days; otherwise, the full amount is due in 30 days. An early payment incentive that accelerates cash collection.
Example: On a $10,000 invoice, paying within 10 days saves $200. After day 10, the full $10,000 is due by day 30.
Due on Receipt
Payment is due immediately when the invoice is received. Common for smaller transactions, retainers, or when the vendor has limited credit tolerance.
Example: An invoice marked "Due on Receipt" means the buyer should pay as soon as they receive it — typically within 1-3 business days.
EOM (End of Month)
Payment is due at the end of the month in which the invoice is issued. Sometimes combined with net terms, as in "Net 30 EOM" — meaning 30 days after the end of the invoice month.
Example: An invoice dated March 15 with "EOM" terms means payment is due by March 31.
CIA (Cash in Advance)
Payment is required before goods or services are delivered. Common for new customers, high-risk accounts, or international transactions.
Example: A vendor requiring CIA means the buyer must pay before the project or delivery begins.
Comparisons & Deep Dives
Go deeper on the most important payment term decisions with dedicated guides.
Why Payment Terms Matter
Payment terms seem like a small detail in a contract, but they have a direct impact on cash flow, collections workload, and revenue predictability.
Days Sales Outstanding
Your choice of Net 15, Net 30, or Net 60 directly determines your baseline DSO. Longer terms mean more cash tied up in receivables.
Follow-Up Complexity
When different contracts have different terms, your team needs different follow-up cadences for each customer. This gets complicated fast.
Working Capital Impact
A company with $1M in monthly revenue on Net 60 terms has $2M in outstanding receivables at any given time. On Net 15, that drops to $500K.
When payment terms get complex, automation matters
Once your team manages contracts with varying payment terms — some Net 15, some Net 30, some with early payment discounts — manually tracking due dates, sending invoices, and following up on overdue payments stops scaling. That's where contract-to-cash automation comes in.
LedgerUp's AI agent Ari reads the payment terms in each contract, creates invoices on the right schedule, and follows up automatically when payments are overdue — regardless of whether the terms are Net 15, Net 30, or 2/10 Net 30.
See how LedgerUp handles payment termsPayment Terms FAQ
Common questions about B2B payment terms, negotiation, and cash flow impact.
What are payment terms?
Payment terms are the conditions under which a seller expects to be paid by a buyer. They specify when payment is due, whether early payment discounts apply, and any penalties for late payment. Common B2B payment terms include Net 30, Net 15, Net 60, 2/10 Net 30, and Due on Receipt.
What is the most common B2B payment term?
Net 30 is the most widely used B2B payment term. It gives the buyer 30 days from the invoice date to make payment. According to industry surveys, approximately 45% of B2B invoices use Net 30 terms, though the actual collection time often exceeds 30 days.
How do payment terms affect cash flow?
Payment terms directly determine when cash arrives. Longer terms (Net 60, Net 90) delay cash inflow, increasing the gap between delivering a service and collecting payment. Shorter terms (Net 15, Due on Receipt) accelerate cash collection but may not be accepted by all buyers. The choice of payment terms affects Days Sales Outstanding (DSO), working capital, and the need for collections follow-up.
Can you negotiate payment terms?
Yes. Payment terms are negotiable in most B2B relationships. Vendors may offer shorter terms to new customers and extend terms to established ones. Buyers with strong creditworthiness often negotiate longer terms. Early payment discounts like 2/10 Net 30 are a common middle ground — the vendor gets paid faster, and the buyer saves money.
What happens when payment terms vary across contracts?
When a business has contracts with different payment terms — some Net 15, some Net 30, some Net 60 — the invoicing, collections, and cash application process becomes significantly more complex. Each contract needs to be tracked individually, follow-up cadences differ, and reporting becomes harder. This is a common reason B2B finance teams look for automation.
Tired of tracking payment terms manually?
LedgerUp reads contract payment terms, generates invoices, and chases overdue payments automatically.
Book a LedgerUp demoSoftware should do the work.
You should move the business.
See how Ari takes billing ops off your team's shoulders - from contract to collected cash.