Definition of Net 30
By Dave Manuel
What does the term "net 30" mean? What is meant by the term "net 30"?
In the business world, "net 30" refers to the length of time (in this case, 30 days) that a customer has to pay their outstanding bill.
Many companies will extend short-term credit to their customers by performing a service or selling a good, and then billing their customer after the fact.
For instance, a plumbing company may perform $1,500 worth of work on a home, and then subsequently invoice their customer after the fact. The plumbing company is extending short-term credit to their customer, as the service has already been performed but the customer has not yet paid for.
If the plumbing company operates with a "net 30" billing policy, this means that they give their customers 30 days to pay off their balances. If the customer doesn't pay after 30 days, then companies will normally start charging interest on the outstanding amount until it is paid.
Most businesses and municipalities operate using a "net 30" billing policy.
A "net 15" policy would mean that customers have 15 days to pay off an outstanding invoice, while a "net 10" policy would mean that they have 10 days.
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