Business owners juggle countless priorities—and one of the most important is getting paid on time. Between March to August in 2023, 13% of large UK companies reported paying more than half of their invoices late, which can create stress for the businesses waiting on payment. Businesses that rely on invoices with delayed payment dates need to find a balance between providing their customers with flexibility and keeping their own cash flow in check. One of the most common ways to do this is by offering net 30 payment terms, which means the payer has a 30-day window to pay once an invoice is sent out.

Extending net 30 has the potential to keep customers coming back, but it also introduces important financial considerations. Below, we’ll explain what net 30 entails, which kinds of businesses might benefit from it, how to set it up properly, and how to tackle possible challenges. We’ll also explain how Stripe can simplify your invoicing process, allowing you to track incoming funds more effectively.

What’s in this article?

• What does net 30 mean, and how can it help your business?
  
• What types of businesses should use net 30 terms?
  
• How do you set up net 30 payment terms?
  
• What are the risks of offering net 30, and how can you manage them?
  
• How does Stripe support businesses offering net 30 terms?
  
• How do you follow up on overdue net 30 payments?
  

What does net 30 mean, and how can it help your business?

Net 30 is a term used in invoicing that grants the buyer 30 days from the issue date to pay in full. For example, if you send an invoice on 1 June, the customer has until 1 July to settle the payment.

The reasons for using net 30 versus immediate payment might seem counterintuitive at first. Immediate payment works well if you’re selling directly to individuals making smaller purchases. But many businesses with larger transactions or those in the B2B space want to build relationships on loyalty and convenience. Allowing a 30-day payment window tells your clients that you understand they have payment cycles to manage, so you’re giving them some breathing room.

Advantages of a net 30 schedule

• Building client loyalty: Customers appreciate when businesses are flexible. Over time, that can strengthen your connection and lead to repeat work.

• Appealing to the market: In industries where immediate payment terms are the norm, letting clients have a 30-day window can set you apart and make your proposals more appealing.

• Expanding opportunities: Some companies won’t consider working with new suppliers unless a net 30 schedule is available. If you’d like to collaborate with larger firms, this month-long invoice window can increase your options.

• Demonstrating credibility: Net 30 has long been recognised as an established business practice. It shows that you have confidence in your customers’ ability to pay on time.

Despite these benefits, not every business should jump straight to net 30. First, evaluate your capacity to wait for incoming revenue.

What types of businesses should use net 30 terms?

Not every venture is well suited to extended payment windows. The following kinds of businesses are known to use net 30 scheduling:

• B2B service providers: Consulting agencies, marketing firms, software developers, and similar service-based operations often incorporate net 30 because their customers (i.e., other businesses) typically pay vendors on a monthly schedule. A 30-day window syncs up with corporate payment practices.

• Wholesalers and distributors: When you’re shipping goods in bulk to retailers, there’s an expectation that your partners might need extra time to sell or distribute your products before paying. Allowing them 30 days to finalize the process can help build a reciprocal relationship.

• Manufacturers: Large manufacturers shipping products to multiple distribution channels could extend a 30-day window to loyal clients, especially those with a proven track record of timely payments.

• Creative freelancers with ongoing contracts: Graphic designers, copywriters, or other creative workers hired by corporate clients might lean on net 30 because it matches the internal billing cycle many corporate finance teams already follow.

Some smaller businesses, such as local tradespeople, also adopt net 30. Think about whether your operation can handle the gap in your incoming funds. If your business is still building a dependable revenue base, or if you prefer a steady daily or weekly intake of money, you might explore shorter terms or partial up-front payments instead.

How do you set up net 30 payment terms?

When deciding to extend a 30-day payment window, establish expectations from the start by adopting transparent instructions and consistent policies.

Incorporate terms into contracts

Whenever you begin a relationship with a new client, put your payment terms in writing via a contract or service agreement. Specify that your invoices will include “net 30,” which means payment is due 30 days from the invoice date. Include any late fees or interest that might apply if you don’t receive payment within that time frame.

State the deadline on invoices

When it’s time to send an invoice, don’t assume your client knows about the 30-day timeline. Include a friendly but firm reminder:

“Payment is due on or before [specific date], which is 30 days from the invoice date.”

State the actual date to help clients plan, rather than forcing them to calculate the due date. Making the date clear also reduces confusion if someone is unfamiliar with standard payment terms.

Automate as much as possible

Managing several invoices at once can become tedious. Many business owners free up time and reduce administrative tasks by using software or platforms that handle everything from generating invoices to tracking due dates. For example, Stripe’s tools can create invoices and help you track outstanding payments from the Stripe Dashboard, which has a unified central view of your information.

Communicate early

If you spot a potential issue with a client’s ability to pay (e.g., if they’ve hinted that their budget is stretched), consider offering partial payments or special discounts if they settle the debt sooner. Handling potential delays before sending an invoice can keep the relationship cordial and avoid frustration later.

What are the risks of offering net 30, and how can you manage them?

While net 30 can help forge loyal, long-lasting relationships with your clients, it does come with potential challenges.

Timing of incoming funds

One of the biggest challenges of net 30 is that you’re waiting up to a month (or longer, if delays arise) to receive revenue from the work you’ve already completed or the products you’ve already shipped. That gap might make it difficult to pay your bills, cover payroll, or replenish inventory. If your margins are tight, even a single overdue invoice can cause stress.

• How to address it: Keep a cushion in your business bank account. You could also request partial up-front deposits for big orders or expensive projects, so you’re not left without funds for a long stretch. Some businesses rely on invoice factoring or lines of credit for bridging short-term deficits.
  

Risk of late or missed payments

A 30-day time frame might tempt some clients to procrastinate – which can lead to late payments – or even ignore the invoice completely.

• How to address it: Before you begin working with a new client, research their payment record. You can run credit checks, request references, or start with smaller projects to gauge reliability. Maintaining transparency from the start helps everyone stay on the same page about payment expectations.
  

Increase in administrative effort

Tracking multiple net 30 invoices across many customers can be time-intensive, especially if you’re working with a manual system. You’ll have to review what’s pending, send reminders, and handle partial payments. This work can be a tedious process if you’re not organised.

• How to address it: Automated tools reduce much of the administrative burden. Billing software can show you which invoices have been sent, paid, or are overdue – all in a single view. You’ll know exactly when to send reminders, which addresses uncertainty.
  

Potential for disputes

When clients are given a longer time period to pay an invoice, there might be a higher chance that questions will arise – whether that’s about deliverables, product quality, or contract terms. If these issues aren’t settled quickly, you might find yourself being asked to make adjustments or do additional work for the client before they agree to pay.

• How to address it: Communicate directly about what the client will receive, how they’ll receive it, and by when. Detailed proposals, product descriptions, or milestone sign-offs can reduce confusion. If a dispute does arise, handle it calmly and document every stage, so both parties can monitor the resolution process.
  

How does Stripe support businesses offering net 30 terms?

If you use net 30, Stripe can help reduce the time you spend sending out invoices, logging data, and emailing reminders. Below are a few ways Stripe’s tools can help support you:

• Automated invoicing: With Stripe, you can create and schedule invoices that go out at specific times. You can customise the invoice to say “Payment due in 30 days” and include the exact due date. This leaves less room for confusion and removes the risk of forgetting to click “send.”

• Multiple payment methods: Stripe’s platform supports credit and debit cards, bank transfers, and local payment methods – so your clients can choose what’s most convenient for them. Making payment easy can encourage customers to pay sooner, rather than waiting until the last minute.

• Payment tracking dashboard: Once an invoice is out, you can view its status in the Stripe Dashboard. You’ll know when it’s been partially or fully paid, and you’ll also see how many days remain before that 30-day window closes.

• Automatic reminders: Stripe can trigger follow-up reminders to clients as a due date approaches. These can reduce awkward phone calls and help your business appear consistent.

• Easy reconciliation: Stripe can connect with your accounting software via apps from the Stripe App Marketplace, which simplifies the process of updating your books. Instead of switching between different systems, your data stays in sync – reducing the chance of introducing human error.

• Credit analysis integrations: Stripe Financial Connections lets you access customers’ financial data quickly – with their consent – to run credit analysis and check their reliability. This combined method gives you more information when deciding whether to offer net 30 terms to a new client.

How do you follow up on overdue net 30 payments?

Even responsible customers can fall behind. Maybe there’s an administrative bottleneck, or your invoice got lost in an email folder. No matter the reason, you’ll need a plan for handling overdue payments. Thoughtful follow-up tactics can salvage the relationship while still urging prompt payment.

Send a friendly reminder as soon as the due date passes

A gentle email – automated or personal – can help remind a customer that the 30-day period is up. Here’s an example of a polite but up-front message:

“Hi [Client name],

Hope you’re doing well. I wanted to check in on Invoice #123, which was due yesterday. Let me know if there are any issues or questions. We appreciate your prompt attention to this.”

Make personal contact after a week

If a week slips by without payment or a reply, you might call or follow up via email and add more firmness in your tone:

“Hello [Client name],

I noticed that Invoice #123 remains open. I wanted to make sure everything is OK on your end. Please let me know when we can expect payment, and if there’s anything we can clarify.”

It’s important to keep things measured but direct. You want to maintain a positive working relationship, so a light nudge can encourage them to settle the invoice.

Pause future work (if necessary)

In some cases, it’s prudent to pause any new projects or shipments until the invoice is resolved. This strategy protects your resources and spotlights that timely payment is an important aspect of working together. Be up front about this policy in your contract, so there are no surprises.

Consider a late fee

Some businesses include a late fee (often a percentage of the invoice total or a fixed amount) for each month the payment is delayed. If you’ve chosen to adopt that policy, mention it in your email reminder. It’s not always necessary if you know the client is otherwise reliable, but it can help if overdue invoices become a repeated issue.

Decide when to escalate

In some cases, you might never receive payment. If extended reminders, phone calls, and negotiations fail, you might have to pursue legal routes or send the account to a collection service. Know your threshold (i.e., how many days or months you’re willing to wait) before taking this step. Applying strict policies about late fees, repeated reminders, and final notices will guide you in deciding if further action is needed – and if the relationship can be repaired.