Invoice Payment Terms

Invoice Payment Terms

According to the Small Business Administration, ‘payment terms are the conditions under which a vendor agrees to provide goods or services to a buyer.’ In other words, payment terms define when and how the buyer will pay for the goods or services they have purchased.

There are a variety of different payment terms that can be used in procurement contracts, but some of the most common include:

· Net 30: The buyer must pay the invoice within 30 days of receipt.

· Net 60: The buyer must pay the invoice within 60 days of receipt.

· 2% 10 Net 30: The buyer must pay 2% of the invoice total within 10 days of receipt, and the remaining balance must be paid within 30 days.

· COD (cash on delivery): The buyer must pay for the goods or services at the time of delivery.

· Progress payments: The buyer makes periodic payments as work is completed on a project.

It’s important to carefully review payment terms before agreeing to them, as they can have a significant impact on your business’ cash flow. For example, net 30 terms may be suitable for businesses with strong cash reserves, while businesses with limited cash flow may prefer progress payments.