Invoice Basics
Net amount on an invoice is the cost before sales tax or fees like a discount. The invoice total with tax and fees is the gross value.
Net Payment Terms
Net 30 on an invoice means payment is due 30 days after the date. Net terms clarify when you want to be paid. You can extend net 30 to net 60 or 90 for clients who pay on time.
The goal of net terms is to provide flexibility for customers and increase probability vendors receive payment. Choosing suitable net terms also depends on the items and services offered. For instance, between a client and contractor stipulates a Net 15 term in invoicing. This means the client is given 15 days upon receiving the invoice to pay the contractor’s services in full.
The most typical net terms include Net 15, Net 30, Net 60, and Net 90. Invoice payment terms can vary depending on industry, product, service and biller-recipient relationship.
"Net" means "full." The number indicates how many days to make payment.
For example, offer 2% off if paid within 10 days, even if the invoice is due 30 days from date. This is 2/10 Net 30. Due upon receipt means payment must be rendered as soon as invoice received.
Frequently Asked Questions
What does "net" mean on a bill?
“Net” refers to the full amount owed. “Net 30” means payment is due within 30 days of the invoice date.
What is the difference between net and gross on an invoice?
The net amount is the cost before sales tax or additional fees. The gross value includes taxes and fees. Some tax-exempt companies only list the net total.
What do different net terms mean?
Common net terms include Net 15, Net 30, Net 60, and Net 90. For example, Net 45 means payment is due in 45 days. Net terms vary by industry, product, and relationship between companies.
What are early payment discounts?
A 2% discount for paying within 10 days is often written as 2/10 Net 30. This incentivizes early payment.
What does “due upon receipt” mean?
This means payment is expected as soon as the invoice is received, ensuring timely payment for small businesses.
What does “Net 30 EOM” mean?
This means payment is due 30 days after the end of the month the invoice is sent.
Net Pay
Net pay refers to the portion of gross pay employees receive as paychecks after accounting for all deductions. This is calculated by reducing the value of deductions from the gross pay, which may include taxes withheld and the employee’s contribution to benefit plans.