Net 60
Payment term allowing 60 days from the invoice date to pay in full.
Definition
Net 60 is a payment term that gives clients 60 calendar days from the invoice date to submit full payment. This extended timeline is commonly used in industries with longer sales cycles, larger contract values, or when working with enterprise clients who have established payment processing schedules.
Offering Net 60 terms is typically a strategic decision to win or retain business with larger clients who expect extended payment windows. However, it requires careful cash flow planning since you won't receive payment for at least two months after completing work or delivering products.
Why It Matters
Net 60 terms significantly impact your business's cash flow and working capital requirements. When you agree to Net 60, you're essentially providing two months of interest-free financing to your client. This can work well if you have strong cash reserves or credit lines, but it can strain smaller businesses that depend on faster payment cycles.
Before offering Net 60 terms, calculate whether you can cover your operating expenses during the extended wait period. Many businesses use Net 60 selectively—offering it only to established clients with excellent payment histories or for particularly large contracts where the extended terms are negotiated in exchange for higher volumes or premiums.
Examples
- 1
An enterprise software vendor offers Net 60 terms to Fortune 500 clients who require extended payment cycles to process large purchases through multiple approval layers.
- 2
A manufacturing supplier uses Net 60 for repeat customers who purchase $50,000+ monthly but requires Net 30 for smaller orders.
- 3
A consultant negotiates Net 60 terms with a corporate client but includes a provision for 50% deposit upfront to mitigate cash flow risk.
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