Net Payment Terms Calculator

Net payment terms (also called trade credit or payment terms) specify when a customer must pay an invoice after receiving goods or services. The most common formats are Net 15 (payment due within 15 days), Net 30 (due within 30 days), Net 60 (due within 60 days), and Net 90 (due within 90 days). Offering net payment terms is essentially providing free credit to your customers - you deliver value today but get paid later. While offering terms can help win customers and increase sales, it also comes with a financial cost: the time value of money means the payment you receive in the future is worth less than the same amount today. Our net payment terms calculator helps you quantify this cost and compare different term options side by side.

1. 1. Enter Your Invoice & Financial Details: Start by entering the invoice amount, your cost of capital (WACC or opportunity cost), expected payment delay beyond terms, and a prompt payment discount percentage to compare against. The net terms calculator automatically analyzes Net 15, Net 30, Net 45, Net 60, and Net 90 side by side.
2. 2. Review Side-by-Side Term Comparison: The net payment terms calculator computes key metrics for each term option: effective payment days (term days + expected delay), cost of offering terms (invoice amount × cost of capital rate × effective days / 365), effective price reduction (cost as a percentage of invoice amount), NPV factor (discount factor at your cost of capital), and adjusted net present value (invoice amount minus cost of offering terms). Each term is ranked with a visual cost bar so you can instantly spot the best and worst options.
3. 3. Compare Discount vs Net Terms: The net terms calculator compares the cost of offering a prompt payment discount (e.g., 2% off for paying within 10 days) against the cost of your best net term option. A clear recommendation tells you whether to offer a discount or stick with net terms - with exact dollar savings for each approach.

• Cost of Offering Terms: The dollar cost of waiting for payment, calculated as your invoice amount multiplied by your cost of capital rate and the effective payment period (term days + expected delay) divided by 365. For a $10,000 invoice at 8% cost of capital with Net 60 terms and a 5-day delay, the cost is $10,000 × 8% × (65/365) = $142.47.
• Effective Price Reduction: The cost of offering terms expressed as a percentage of the invoice amount. This shows how much your effective price decreases due to delayed payment. For Net 60 with the example above, that's a 1.42% effective price reduction.
• Adjusted Net Present Value (NPV): The invoice amount minus the cost of offering terms - essentially the true value of the payment in today's dollars. For Net 15 with low cost of capital, the adjusted NPV is close to the invoice amount. For Net 90 with high cost of capital, it can be significantly less.
• Net Present Value Factor: The discount factor applied to the future payment to calculate its present value. A factor of 0.98 means the future payment is worth 98% of its face value today. This is calculated as 1 / (1 + cost of capital rate × (effective days / 365)).
• Discount vs Terms Comparison: A direct dollar comparison between the cost of offering a prompt payment discount and the cost of your best net term option. The calculator recommends the lower-cost strategy with a clear recommendation badge and explanation.

When choosing net payment terms, consider these factors: Industry standards vary - Net 30 is standard in most B2B industries, while construction and manufacturing often use Net 60 or Net 90. Your cost of capital is the most important factor: at 6% cost of capital, the cost of Net 30 is about 0.49% of invoice value; at 15%, it jumps to 1.23%. Customer payment behavior matters - if customers consistently pay 10 days late, that effectively adds 10 days to every term's duration. Competitive pressure may force longer terms, but our net terms calculator helps you quantify exactly how much those longer terms cost so you can factor that into pricing decisions. Note that this calculator provides estimates based on standard present value calculations. Your actual costs may vary based on your specific financing arrangements and customer payment patterns. All calculations run locally in your browser - no data is sent to any server.