What does net 60 mean on an invoice?
The phrase "net 60" refers to how long a customer has to pay for goods or services after the bill is received.The customer has 60 days to pay before the bill is late.If your business needs to bill customers, you may want to get payment terms in writing when you first sign a contract, and put language on invoices explaining when payment is due and what happens if it's not.
When you send a bill, you will usually get a notice of when the payment is due.The net balance on the bill is due in 30 days, 60 days or whatever number is indicated.
If the bill is paid sooner, a percentage discount is given.The number before and after the slash shows how much the discount is and how long the customer has to pay the bill.
"due on receipt" means that the customer is supposed to pay the bill immediately after receiving it.The bill may be labeled "past due" if the deadline has passed.
It might be tempting to label all your invoices due on receipt.If you have incurred expenses of your own, you want to be paid as quickly as possible.
There are reasons to use more generous billing terms.Some customers may be more willing to work with you if you give them some breathing room to evaluate your work and get the funds together to pay you.Giving 30 or 60 days' notice will give you a clear time after which you can begin to request payment more aggressively, knowing how long your client has to pay.Cash-flow impact of payment terms is not always clear cut.
Some businesses will pay invoices after a certain time delay, if you work with them.When you first sign a contract, you can try to negotiate these terms, but larger organizations may be less likely to deviate from its standard terms.
If you're starting work for a company or first selling merchandise to a particular organization, you should get an agreement in writing that spells out what you are going to provide and when you expect to be paid.You can spell out the amount of time the customer has to pay your bills, whether it's "net 60" or something else.Some contracts might specify how the customer can evaluate whatever it is you've delivered, ask for replacements of damaged or otherwise unusable merchandise, and request alterations to work you have performed.
Depending on the nature of the business you're in, you may specify when you will invoice the company, which may be on a monthly basis or based on some other terms.It is less likely that a customer will get sticker shock on seeing your bill or be surprised at how little time there is to pay it if it is spelled out in writing.
It is possible that your contract will specify how you want to get paid, which will help make sure you don't have surprises such as a client trying to pay by credit card when you can only accept cash or a check.If the client is notified ahead of time, you can reiterate payment terms on your invoices, but they are more likely to be observed.
If you don't have a standard contract that you use with customers, you might want to ask a lawyer for help drafting one.If there's ever a dispute about your bill, this will be worth it in the long run.
When you send a bill, you want to make it easy to understand so that it's quick to pay and file.Along with a description of what the bill is for, include your company's name and the name of the company you're billing.It's a good idea to include your mailing address, email address and phone number.If your customer has a question, someone can contact you without having to sift through other correspondence to find out how to reach you.
When the due date clock starts to tick, the invoice date should be included along with the payment terms.It is helpful to include an invoice number so that you can refer to it in the future.
Some organizations that you send invoices to might ask for other information, like a supplier ID for your company or a work order number.If it gets you paid faster, it's worth it because it can be a bit of a pain to change your bill format.
If you agree to the payment terms ahead of time, you will want to follow the terms to maintain a good relationship with your supplier.
It's a good idea to make sure you're happy with your purchase, because it can be harder to get your money back if you don't.You may want to review the terms of your contract to make sure your supplier isn't asking for harsher payment terms than you've approved.If that is the case, you should contact the company.
Customers may be required to pay bills within a certain amount of time.This could hold true for government contracts in certain countries.New York City requires that workers be paid within a certain amount of time.