Net 30, Net 60, Net 90: Payment Terms Explained

"Net" terms tell the customer how many days it has to pay the full invoice amount. Net 30 means payment is due 30 days after the invoice date (or after receipt, if the contract says so), Net 60 means 60 days and Net 90 means 90 days. The longer the term, the longer you carry the cost of the work yourself.

You will also see early-payment discount terms such as 2/10 Net 30: the customer may take a 2% discount if it pays within 10 days, and otherwise owes the full amount in 30.

Count calendar days from the date the clock starts, which the contract defines. For example, an invoice received on March 3 under Net 30 is due April 2; under Net 60 it is due May 2. If the contract starts the clock at receipt or acceptance rather than the invoice date, use that date instead.

On federal contracts the start of the clock matters a great deal, as the next section explains.

Agencies don't pick Net 60 or Net 90 the way a commercial customer might. The Prompt Payment Act (31 U.S.C. Chapter 39, 5 CFR Part 1315) and the contract's payment clause set the due date:

• Most contracts: 30 days after the designated billing office receives a proper invoice, or 30 days after government acceptance if that is later (FAR 52.232-25). Commercial contracts follow the payment terms in FAR 52.212-4.
• Construction progress payments: 14 days after a proper payment request (FAR 52.232-27).
• Small businesses: agencies are directed to accelerate payments, with a goal of 15 days after a proper invoice (FAR 32.009-1).
• Late payment: the agency owes interest automatically, at a rate the Treasury sets every six months.

The 30-day clock only starts once a proper invoice is received and the work is accepted. Approval moves through multiple offices, receiving reports have to match, large invoices get extra review and a rejected invoice resets the clock. Year-end and budget disruptions add more delay. See how government contractors get paid for the full cycle.

The result: a contract that says Net 30 commonly takes 45, 60 or 90 days from the work to the cash, while payroll, subcontractors and suppliers are due on their own schedule.

If you sub to a prime, your payment terms come from the subcontract, not the Prompt Payment Act. Many subcontracts use Net 30 to Net 60, sometimes with pay-when-paid language that ties your payment to the prime's. On federal construction, primes must pay subcontractors within 7 days of receiving payment (FAR 52.232-27), and primes that receive accelerated payments must pass them on to small business subs where practicable (FAR 52.232-40).

Read the payment terms before you sign. A Net 60 subcontract on top of a slow agency payment cycle can stretch your wait well past 90 days.

For suppliers selling to the government, the terms are largely set for you by regulation, so the controllable factors are invoice quality and speed of acceptance. For primes buying from suppliers, shorter terms such as Net 30 with prompt flow-down keep critical subcontractors and suppliers stable, which protects contract performance.

Either way, plan for actual collection time rather than the stated term when you forecast cash.

Clean, prompt invoicing shortens the wait but can't remove it. Invoice factoring closes the gap directly: you assign the approved invoice to a funding partner and receive most of its value now.

Encore advances 80 to 90% of invoice value. Most clients onboard in two to three weeks, and once active, each invoice is funded the same or next day. See government invoice factoring, explained or government contract factoring to get started.