Glossary
An invoice payment term giving the customer 30 days to pay.
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Short answer: Net 30 is an invoice payment term giving the customer 30 days to pay; net 45 and net 60 work the same way. The seller carries the cost until payment arrives, and many customers pay later than the due date. Terms therefore decide how much working capital a business needs.
Key facts
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An invoice payment term giving the customer 30 days to pay.
Net 30, net 45 and net 60 are common business terms. The seller carries the cost until payment arrives.
Terms decide how much working capital the business needs.
A $20,000 invoice issued on March 1 on net 30 is due March 31, and often arrives later.
Canadian B2B and government customers often pay on net 30 or longer.
Reviewers read the gap between payroll and receipts. Listing major customers' terms helps explain the deposit pattern.
The term on the invoice is not the term in practice. Track actual days to pay; that is the number your cash flow lives with.
Invoice the day work is completed, not at month-end. State the due date clearly, not only the term, and include payment instructions that make paying easy, such as electronic funds transfer details.
Follow up a few days before the due date with a friendly reminder, and again on the day after. Most late payments are disorganisation, not refusal. A consistent routine shortens average days to pay without damaging relationships.
For new customers or large jobs, consider deposits or progress billing. If a few customers consistently pay at 60 or 90 days, price that in or consider factoring their invoices. In a funding file, a short list of major customers with actual payment times explains the gaps a reviewer sees.
A Mississauga packaging distributor invoices most customers on net 30, but its actual average collection is 47 days. Its suppliers want payment in 30. The 17-day gap, multiplied by $150,000 in monthly sales, means about $85,000 of cash is always tied up. Tightening follow-up to bring average collection to 38 days frees roughly $45,000, which may remove the need for a short-term facility altogether.
Key takeaway: The term on the invoice is a promise; the days customers actually take is the number your cash flow lives with.
Offering a small discount for payment within ten days can shorten collection significantly. Compare the discount cost with the cost of funding the gap.
Reviewed by the Merchant Fund Express team on October 12, 2026. Official pages checked as of that date.
They explain timing gaps between work and deposits.
See the related guides and the comparison pages, or apply and ask.
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Educational information only. It is not legal, tax or accounting advice.
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