Common net terms
- Due on receipt: payment expected right away.
- Net 15, net 30, net 60: the full amount is due within that many days, usually from the invoice date. See net 30.
- End of month terms: some agreements count from the end of the month in which the invoice is issued.
- Early payment discounts: some sellers offer a small discount for paying early. Any discount should be written into the agreement.
Why net terms matter to a shop
Every day a customer has to pay is a day the shop waits for cash after paying wages, parts and overhead. The FDIC's Money Smart for Small Business cash flow module describes days sales outstanding as the average number of days it takes a business to collect payment after a sale, and treats it as part of the cash conversion cycle. Longer terms increase that time. See days sales outstanding.
Setting net terms for fleet customers
- Decide which customers qualify, based on history or a credit check.
- Set a credit limit for each account.
- Write the term, late fee policy if any, and the start of the clock into the agreement.
- Print the term and due date on every invoice.
- Review open balances weekly. See accounts receivable aging.
Federal agencies follow their own rules: under 5 CFR 1315.4, payment is generally due 30 days after receipt of a proper invoice unless the contract specifies otherwise.
Related: statement billing, how to handle net 30 fleet terms.
MetaFleet supports invoicing with per-customer terms printed on every invoice, payments with pay links, and reports. Get a walkthrough.