Payment Terms — what are Payment Terms and what do they mean?

. 1 min read

Payment terms are, generally speaking, the conditions under which a seller or vendor will sell a product or service to a buyer. Essentially, these are stipulations that legally and financially protect both parties in a sale.

In larger companies, an Accounts Payable department manages vendors, suppliers, payment terms and invoices.

Examples of Common Payment Terms

Here are a number of common payment terms you are likely to find on a given invoice.

  • Payment seven days after invoice date (Net 7)
  • Payment ten days after invoice date (Net 10)
  • Payment 30 days after invoice date (Net 30)
  • Payment 60 days after invoice date (Net 60)
  • Payment 90 days after invoice date (Net 90)
  • End of month (EOM)
  • Cash on delivery (COD)
  • Cash before shipment (CBS)
  • Deferred payments
  • Payment in advance (PIA)