Revisiting Payment Terms

When did you last truly think about your payment terms? How many of your customers have “stretched you out”? If you operate relying upon open accounts, do your terms match the way you actually bill? Let’s first think about the common terms, then you can identify what works for you.

The most common terms:

• Net 7 = Payment due seven days after the invoice date.
• Net 10 = Payment is due ten days after the invoice date.
• Net 30 = Payment is due thirty days after invoice date.
• Net 60 = Payment is due 60 days after invoice date.
• EOM = End of Month: Payment is due at the end of the month of the invoice date.
• PIA = Payment in Advance. Think: Deposit or Down Payment.
• CIA = Cash in Advance. PIA except payment to be made in full (cleared) before delivery.
• Immediate or COD = Payment due upon receipt of invoice
• EOAP 60 = End of Accumulation Period. Ex. If the “accumulation period” is from the 26th day of one month through the 25th day of the next month, then the total statement (accumulation of invoices between those dates) is due within 60 days of the end of the period.

Should your terms be “Net 30” or “EOAP 30”?

If you need to update this term, what else on your credit application, invoices, delivery tickets, and/or statements does not accurately reflect the actual way your company conducts business?