Payment Terms
The conditions under which a seller expects payment from a buyer, including due date and any discounts.
Definition
Payment terms define when and how a buyer must pay an invoice. Common terms include Net 30 (due in 30 days), 2/10 Net 30 (2% discount if paid in 10 days, otherwise due in 30), and Due on Receipt. Payment terms affect cash flow planning and vendor relationships.
Why It Matters
Understanding and managing payment terms is essential for cash flow optimization. Paying too early ties up cash; paying too late damages vendor relationships and incurs penalties.
Examples
Net 30
The full invoice amount is due 30 days from the invoice date. No early payment discount offered.
2/10 Net 30
The buyer can take a 2% discount by paying within 10 days; otherwise the full amount is due in 30 days.
How Nexus AP Helps
Nexus AP tracks payment terms per vendor, identifies discount opportunities, and optimizes payment timing to balance cash flow with savings.
Start Free TrialFrequently Asked Questions
What is the most common payment term?
Net 30 is the most common, meaning payment is due 30 days from invoice date. Other common terms include Net 15, Net 45, Net 60, and Due on Receipt.
Can payment terms be negotiated?
Yes. Vendors may offer better terms for prompt payment history or higher volume. Negotiating terms is a key part of vendor management.
Category
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