Terms of Sale

Extending credit in B2B sales is just part of the game. Whether a company is highly creditworthy or not, most buyers are going to ask for terms and why wouldn’t they? From their perspective, it’s essentially free financing, saving some of the world’s largest companies hundreds of millions in capital costs every year.

In some cases, terms are negotiable especially if what you’re selling is in high demand. But more often than not, you’re working within the terms your customer sets. It’s common to see anything from Net 7 all the way out to Net 120, with Net 15, 30, 45, 60, 75, and 90 falling in between.

A lot of this is driven by industry norms. For example, in the oilfield industries might expect Net 90, while produce growers and distributors often operate closer to Net 21.

At the end of the day, even if you agree on terms, you shouldn’t assume payments will come in exactly on time. The smarter approach is to plan your cash flow with some cushion because delays are more common than most businesses expect.