When net-30 actually pays
Measured across small businesses, invoices on 30-day terms clear in 45–50 days. The interesting question is what the faster-paid companies do differently.
“Net-30” turns out to be less a payment date than a mood. Measured across small businesses, invoices written on 30-day terms actually clear in about 45 to 50 days — and that's the average, which means half run longer. A company living on those terms isn't just a vendor. It's quietly operating as an interest-free lender to firms usually larger than itself.
The interesting question is what the faster-paid companies do differently. Three patterns show up again and again — all upstream, where the leverage still exists:
- Deposits, as a matter of course. Under $10k of work: half up front, balance on delivery. Over $10k: thirds — signing, midpoint, delivery. A buyer's reaction to a deposit request is also a free preview of how they'll treat invoices later.
- The invoice ships when the work ships. The 30-day clock starts when the invoice lands, so every day it sits unbilled is a free extension nobody asked for. A monthly billing night quietly turns net-30 into net-45 — self-inflicted.
- Terms priced, not policed. The 1.5% late fee in the footer rarely gets collected from anyone who matters. The reverse works better: quote the real price for net-30, and offer 2% off for payment on receipt, with a card link right in the invoice. Same economics — but now paying fast is the deal, and paying slow is simply full price.
One more observation from the field: “we only do net-60” from a big customer is an opening position, not a law of physics. Net-30 with a deposit is a perfectly ordinary counter — and the response to it is useful information either way.
Filed under Cash Flow & Finance · Field guide: The Timing of Money