Glossary
What does net 60 mean?
Net 60 means payment is due 60 days after the invoice date. Learn what net 60 costs you in cash flow and how to protect yourself when a client asks.
Updated · By PayToMe Editorial
Net 60 is a payment term meaning the full invoice amount is due 60 days after the invoice date. It gives the client two months to pay, which is twice as long as net 30.
How it works
The 60 days count from the invoice date and include weekends. An invoice dated July 1 is due August 30. Use the due date calculator to avoid miscounting around month ends.
Net 60 is a form of unpaid financing. You do the work, pay your own costs and wait. If your own suppliers or staff want payment sooner, the gap has to be covered from savings or credit. That gap is a cash flow problem, and it grows with each invoice you send.
When a client asks for net 60, you have options:
- Accept it and price it in. Add the cost of waiting to your rates.
- Counter with net 30 and explain your own supplier terms.
- Split the invoice. Take a deposit up front and invoice the rest on net 60.
- Offer an incentive. A small discount for payment within 10 days can pull cash forward. See early payment discounts.
- Sell the invoice. Some businesses use invoice factoring to get cash sooner, at a fee.
Example
You bill $9,000 per month to one client on net 60 terms. At steady state, about two months of work is always unpaid.
| Item | Amount |
|---|---|
| Monthly billing | $9,000 |
| Unpaid at any time (about 2 months) | $18,000 |
| Same client on net 30 | $9,000 |
| Extra cash tied up by net 60 | $9,000 |
If borrowing that $9,000 costs you 10% a year, the extra wait costs roughly $900 a year, which is about 1% of annual billing of $108,000. A 2% discount for payment inside 10 days would cost $180 per invoice, so compare both before you decide.
Related terms
- Net 30: payment due after 30 days.
- Cash flow: the timing of money coming in and going out.
- Early payment discount: a way to shorten long terms.