'Net terms' is common B2B language, but small businesses new to it often aren't sure how — or whether — to offer it. Here's a breakdown.
What net terms means
Net terms means payment is due a set number of days after the invoice date — for example, Net 30 means payment is due 30 days later, without any early payment expectation.
Why businesses offer it
Offering net terms is often expected by larger clients and can make you more attractive to work with, since it gives their accounting department time to process payment through normal cycles.
The risk involved
Offering net terms essentially means extending short-term credit to your client — if they pay late or not at all, you've already delivered the work without full payment.
How to manage the risk
- Offer net terms selectively, based on client size, reputation, or history.
- Consider shorter net terms (Net 15) for newer or smaller clients.
- Require a deposit alongside net terms for larger projects.
Should small businesses offer net terms?
It depends on your cash flow tolerance and client base — if working with larger companies that expect it, offering net terms selectively, with appropriate risk controls, is often necessary to win the work.