What is net 30?

Net 30 is a payment term requiring full invoice payment within 30 days of the invoice date, representing standard business credit terms. For professional service firms, net 30 terms balance client convenience with reasonable collection timing.

Key characteristics

• Payment due in 30 days

• Standard business terms

• From invoice date

• No early payment discount

• Creates accounts receivable

• Industry standard

Why it matters for professional service firms

Payment terms affect cash flow timing and collection effort. Net 30 is widely accepted, but it means waiting 30 days or more for payment. Professional service firms should set terms appropriate to their cash needs while remaining competitive, considering shorter terms or deposits for new clients.

Real-world example

Sarah's invoices stated net 30. Analysis: average actual collection was 42 days. Modified approach: net 30 for established clients, net 15 for new clients until payment history is established, and 2% discount for payment within 10 days (2/10 net 30). Average collection improved to 28 days. Terms aligned with cash flow needs.