Net 30 vs Net 15
How Payment Terms Affect Cash Flow
The difference between Net 30 and Net 15 is more than 15 days. Your choice of payment terms directly impacts DSO, working capital, collections workload, and customer relationships. This guide breaks down when to use each — and when to consider Due on Receipt or early payment discounts.
Net 15 vs Net 30 vs Due on Receipt
A side-by-side comparison of the three most common B2B payment terms.
| Net 15 | Net 30 | Due on Receipt | |
|---|---|---|---|
| Payment window | 15 calendar days | 30 calendar days | Immediate (1-3 days) |
| Typical DSO | 15-25 days | 30-60 days | 1-5 days |
| Cash flow speed | Fast | Moderate | Fastest |
| Buyer acceptance | SMB-friendly | Universal | Limited to small deals |
| Collections effort | Low | Moderate-High | Minimal |
| Late payment risk | Lower | Higher | Lowest |
| Working capital needed | ~0.5 months revenue | ~1 month revenue | Minimal |
Cash Flow Impact
How much cash is tied up in receivables at any given time, based on $100,000/month in revenue.
$100,000/month
$50,000 tied up at any time
$100,000 tied up at any time
$200,000 tied up at any time
Key insight: Switching from Net 30 to Net 15 frees up roughly one half-month of revenue in working capital. For a company doing $100,000/month, that's $50,000 that could be deployed for growth instead of sitting in receivables.
Which Payment Terms Should You Use?
The right payment terms depend on your customer base, cash flow needs, and deal size. Here's a scenario-based guide.
You sell monthly SaaS subscriptions to SMBs
Net 15Monthly billing cycles are short. Net 30 means you might not collect for one month's service before the next month's invoice goes out. Net 15 keeps you ahead.
You have enterprise clients with procurement processes
Net 30Enterprise AP departments need time for purchase order matching, multi-level approvals, and payment scheduling. Net 15 will cause friction.
You provide one-time services under $1,000
Due on ReceiptSmall, one-off transactions don't justify a 30-day collections cycle. Get paid immediately and move on.
You want faster payment but your clients expect Net 30
2/10 Net 30Offer a 2% discount for payment within 10 days. The client saves money, you get cash faster, and Net 30 remains the fallback.
You have a mix of SMB and enterprise customers
Net 15 for SMB, Net 30 for enterpriseSegment your terms by customer size. This maximizes cash collection from SMBs while meeting enterprise requirements.
You're cash-constrained and growth depends on receivables
Net 15 with late fee clauseShorter terms plus a contractual late fee clause (e.g., 1.5% per month) incentivize on-time payment.
The real problem: managing mixed payment terms at scale
Most B2B companies don't use a single payment term across all contracts. You might have SMB clients on Net 15, mid-market on Net 30, and enterprise on Net 60. Each requires different invoice timing, different follow-up cadences, and different escalation paths.
LedgerUp reads the payment terms from every signed contract, invoices on the correct schedule, and follows up automatically — adapting to whatever terms are in each deal. No spreadsheets, no calendar reminders, no missed follow-ups.
Payment Terms FAQ
Should I use Net 15 or Net 30?
It depends on your customer base and cash flow needs. Use Net 15 for SMB customers, recurring subscriptions, and when you need faster cash collection. Use Net 30 for enterprise clients, government contracts, and industries where it's the standard. Many B2B companies use both — segmenting terms by customer size.
How much does switching from Net 30 to Net 15 improve cash flow?
Switching from Net 30 to Net 15 typically cuts your DSO by 30-50%, depending on payment behavior. For a company with $100K in monthly revenue, this means roughly $50K less tied up in receivables at any given time. The actual improvement depends on how quickly customers pay relative to terms.
Can I use different payment terms for different customers?
Yes, and many B2B companies do. It's common to offer Net 15 to SMB clients and Net 30 to enterprise buyers. The key is having your invoicing and collections process handle the variation — which is where manual tracking breaks down and automation becomes valuable.
What is Due on Receipt?
Due on Receipt means payment is expected as soon as the buyer receives the invoice — typically within 1-3 business days. It's the fastest payment term and is common for small transactions, retainers, or when the vendor has limited credit tolerance.
What is the best payment term for a new business?
For new businesses, Net 15 or 2/10 Net 30 are strong starting points. They collect cash faster than Net 30 while remaining professional. As you build relationships with larger clients, you can extend terms on a case-by-case basis. Always start shorter and extend — it's much harder to shorten terms with existing customers.
Stop managing payment terms in spreadsheets
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