Payment terms - commonly used invoice payment terms and their meanings
Your invoice payment terms and conditions can impact the number of days it takes you to get paid. Without them, you aren't communicating when a payment is expected, as well as other conditions like your preferred payment method and any consequences of late payments.
Invoice payment terms
This list explains the payment terms most commonly used on invoices.
|Net monthly account||Payment due on last day of the month following the one in which the invoice is dated|
|PIA||Payment in advance|
|Net 7||Payment seven days after invoice date|
|Net 10||Payment ten days after invoice date|
|Net 30||Payment 30 days after invoice date|
|Net 60||Payment 60 days after invoice date|
|Net 90||Payment 90 days after invoice date|
|EOM||End of month|
|21 MFI||21st of the month following invoice date|
|1% 10 Net 30||1% discount if payment received within ten days otherwise payment 30 days after invoice date|
|COD||Cash on delivery|
|Cash account||Account conducted on a cash basis, no credit|
|Letter of credit||A documentary credit confirmed by a bank, often used for export|
|Bill of exchange||A promise to pay at a later date, usually supported by a bank|
|CND||Cash next delivery|
|CBS||Cash before shipment|
|CIA||Cash in advance|
|CWO||Cash with order|
|1MD||Monthly credit payment of a full month's supply|
|2MD||As above plus an extra calendar month|
|Contra||Payment from the customer offset against the value of supplies purchased from the customer|
|Stage payment||Payment of agreed amounts at stage|
When creating your invoice payment terms, bear in mind that if you have clear, concise and consistent payment terms, it is more likely that your invoice will be paid in time and this will have a positive impact on your business cashflow.
For further information on contract terms and conditions see setting terms and conditions and credit checking your customers and setting credit limits.