What exactly does 'Net 10' or 'Net 30' mean?

[Flint]

I know it means that payment terms are 10 or 30 days but exactly what does that mean? When should I recieve payment? If it is by BACS or transfer, should it be in my account on the tenth day? What aboout cheques?

Am I also right to assume that the 10 or 30 days are simply days, irrepsective of the type i.e. inclusive of Sundays and Bank hols?

For those a bit further down the business road these may seem pretty obviousl questions but from where I am sitting the waters are still abit muddy :|

Thanks

F

 

[brighton_belle]

Hi

If you state your payment terms as Net 10 or Net 30 you should expect to receive your payment within the 10 days or within 30 days from the date of invoice - same principle whether, BACS or cheque - it should be recieved by you within that timeframe.

The days are actual days irrespective of weekends, bank hols etc

eg: Net 30 = your invoice date: 10th April 2007 / your payment is due by: 10th May 2007

It gets slightly more complicated if you introduce discounts for early payment etc but my favourite is payment terms "end of month following month of invoice" !! (I receive an invoice dated 1st April but don't have to pay it till the very end of May...fab!)

Hope this helps.

brighton_belle

 

[KM-Tiger]

my favourite is payment terms "end of month following month of invoice" !!

In many areas of business 30 days is usually interpreted as that. That's certainly how I work, and I've only one supplier out of about 100 who complains.

But to answer the OP more directly, it depends who is paying you and what their normal procedure is. If you want really prompt payment then it's a combination of carefully drafted terms and building a good relationship with the person resonsible for paying.