Net 60 Days Calculator

Net 60 is a payment term indicating that the full invoice amount is due within 60 days of the invoice date. The "Net" refers to the total amount owed (after any applicable discounts or credits), and "60" specifies the number of days until payment is due. For example, if you receive an invoice dated January 1st with Net 60 terms, payment is due by March 2nd (or March 1st in a leap year). This is a common B2B payment term, especially for larger transactions, government contracts, and established business relationships. Other variations include Net 30 (most common), Net 45, Net 90, and Net 120. The longer payment terms give buyers more time to manage cash flow but delay revenue for sellers. Net terms are typically calendar days unless specified as "Net 60 Business Days," which would exclude weekends and holidays.

2/10 Net 60 is a payment term offering an early payment discount. It means: 2% discount if you pay within 10 days, otherwise the full amount (Net) is due in 60 days. CALCULATION EXAMPLE: Invoice amount: $10,000. If paid within 10 days: $10,000 × (1 - 0.02) = $9,800. You save: $200. If paid after 10 days but within 60: $10,000 (full amount). COMMON VARIATIONS: 1/10 Net 30 = 1% if paid in 10 days. 2/10 Net 30 = 2% if paid in 10 days (most common). 3/10 Net 60 = 3% if paid in 10 days. 2/15 Net 45 = 2% if paid in 15 days. NOTATION BREAKDOWN: First number (2) = Discount percentage. Second number (10) = Days to get discount. "Net" number (60) = Total days until due. The discount period starts from the invoice date, not the receipt date. Always verify the exact terms with your vendor as interpretations can vary.

Early payment discounts often provide exceptional returns when analyzed as an annualized rate. Here's how to evaluate them: ANNUALIZED RATE FORMULA: Rate = (Discount% / (100% - Discount%)) × (365 / (Full Days - Discount Days)). EXAMPLE (2/10 Net 60): Rate = (2 / 98) × (365 / 50) = 0.0204 × 7.3 = 14.9% annualized return. COMMON TERMS ANALYZED: 2/10 Net 30: 36.7% annualized - Excellent, almost always take. 2/10 Net 60: 14.9% annualized - Very good, usually take if cash available. 1/10 Net 30: 18.2% annualized - Good return. 1/15 Net 60: 8.2% annualized - Compare to your cost of capital. DECISION FRAMEWORK: Compare the annualized rate to: Your cost of borrowing (if you'd need to borrow to pay early). Your investment return rate. Your weighted average cost of capital (WACC). IF YOUR BORROWING COST IS 8%: Take 2/10 Net 60 (14.9% return) - borrow money to pay early if needed. This is essentially earning 14.9% on the borrowed amount. GENERAL RULE: If annualized rate > your cost of capital, take the discount. Most 2/10 terms should almost always be taken.

Payment terms can be calculated using either calendar days or business days, and the difference is significant: CALENDAR DAYS (Most Common): Count every day including weekends and holidays. Net 30 from Jan 1 = Jan 31. Simpler to calculate. Standard unless otherwise specified. BUSINESS DAYS: Count only Monday through Friday. Excludes weekends and federal holidays. Net 30 Business Days from Jan 1 ≈ Feb 10-12 (depending on holidays). Used in some contracts, especially government. CALCULATION DIFFERENCE EXAMPLE: Invoice Date: Monday, January 1st. Net 30 Calendar Days: January 31st. Net 30 Business Days: ~February 10th (assuming no holidays). This is a 10-day difference! HOLIDAYS TO CONSIDER (US): New Year's, MLK Day, Presidents Day, Memorial Day, Independence Day, Labor Day, Columbus Day, Veterans Day, Thanksgiving, Christmas. BEST PRACTICES: Always clarify with vendors which method applies. Document the method in your contracts. If due date falls on weekend/holiday, payment is typically due the next business day. When in doubt, calendar days is the default interpretation.

Payment terms vary significantly across industries based on business practices, competitive pressures, and cash flow patterns: PROFESSIONAL SERVICES: Standard: Net 30. Range: Net 15 to Net 45. Often milestone-based for large projects. Retainers may require upfront payment. MANUFACTURING: Standard: Net 30 to Net 60. Range: Net 30 to Net 90. Longer terms for large orders. May include progress payments. RETAIL/WHOLESALE: Standard: Net 30. Range: Net 15 to Net 45. Often includes early payment discounts. Larger retailers may demand Net 60-90. CONSTRUCTION: Standard: Net 30 to Net 45. Range: Net 30 to Net 90. Progress payments (10-30-60) common. Retention holdbacks typical (5-10%). TECHNOLOGY/SAAS: Standard: Net 30. Range: Net 15 to Net 45. Annual prepay discounts common. Credit card payments increasingly standard. GOVERNMENT: Standard: Net 30 to Net 60. US Prompt Payment Act requires payment within 30 days. Interest penalties for late payment. Large contracts may have longer terms. HEALTHCARE: Standard: Net 30 to Net 45. Insurance reimbursement delays common. Patient payments often due upon receipt. STARTUPS/SMALL BUSINESS: Often pay on shorter terms. May be asked for prepayment. Building payment history improves terms over time.

Late payment consequences vary by vendor relationship and contract terms: COMMON LATE PAYMENT PENALTIES: Interest Charges: Typically 1-1.5% per month (12-18% annually). Often stated as "1.5% per month on overdue balances." Some contracts specify daily rates. Late Fees: Flat fee (e.g., $25-50) or percentage (2-5%). May compound with interest. Collection Costs: Vendor may pass on collection agency fees. Legal fees if it goes to court. BUSINESS RELATIONSHIP IMPACTS: Loss of early payment discounts. Stricter payment terms on future orders. Credit hold on account. Reduced credit limits. Damage to business credit score. Potential loss of vendor relationship. LEGAL CONSIDERATIONS: Contract terms govern penalties. Some states cap interest rates. B2B transactions have fewer protections than consumer. Prompt Payment Acts (federal/state) apply to government contracts. BEST PRACTICES IF YOU'LL BE LATE: Communicate proactively with vendor. Negotiate payment plan if needed. Document any agreed modifications. Pay something to show good faith. Prioritize vendors critical to operations. TRACKING TIPS: Set up calendar reminders 7-10 days before due. Use accounting software with aging reports. Review AP aging weekly. Build relationships with key vendor contacts.

Negotiating payment terms is a normal part of business relationships. Here's a strategic approach: WHEN TO NEGOTIATE: New vendor relationships. Large or recurring orders. Long-standing relationships with good history. When vendors want to close deals. During contract renewals. WHAT TO NEGOTIATE: Extended terms (Net 30 → Net 60). Early payment discounts. Reduced or eliminated late fees. Flexible payment schedules. Volume discounts combined with terms. LEVERAGE POINTS: Payment history (always paid on time). Order volume (commit to larger orders). Long-term relationship potential. Multiple vendor options. Market conditions. NEGOTIATION SCRIPTS: "We'd like to move forward, but our standard terms are Net 60. Can you accommodate that?" "We're evaluating several vendors. Extended payment terms would be a deciding factor." "We can commit to larger volumes if you can offer 2/10 Net 60 terms." "Given our payment history, would you consider extending our terms?" WHAT VENDORS WANT: Certainty of payment. Predictable cash flow. Long-term relationships. Volume commitments. Prompt communication about issues. TIPS: Start by asking—many vendors have flexibility. Put agreements in writing. Honor negotiated terms to build trust. Renegotiate periodically as relationship grows. Consider vendor financing programs.

Payment terms significantly impact both sides of the cash flow equation: FOR BUYERS (Accounts Payable): BENEFITS OF LONGER TERMS: More time to collect from your customers before paying suppliers. Better cash flow management. Ability to earn interest on funds longer. Flexibility during slow periods. COSTS OF LONGER TERMS: May miss early payment discounts (significant opportunity cost). Some vendors charge more for extended terms. May affect vendor relationships. OPTIMAL STRATEGY: Match AP terms to AR terms when possible. Take early payment discounts when annualized return exceeds cost of capital. Negotiate terms based on actual cash cycle needs. FOR SELLERS (Accounts Receivable): IMPACT OF OFFERING TERMS: Longer terms = delayed cash receipt. Net 60 means 60+ days before you see money. Must finance operations while waiting. Increases working capital requirements. MITIGATION STRATEGIES: Offer discounts for early payment (2/10 Net 30). Invoice immediately upon delivery. Send reminders before due date. Consider invoice factoring for immediate cash. Require deposits for large orders or new customers. CASH CONVERSION CYCLE: Days Sales Outstanding (DSO) - how long to collect. Days Payable Outstanding (DPO) - how long to pay. Days Inventory Outstanding (DIO) - how long inventory sits. Goal: Minimize DSO + DIO, maximize DPO (within reason). RULE OF THUMB: Try to collect from customers before you must pay suppliers. If you offer Net 30 to customers, negotiate Net 45-60 with vendors.