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Key takeaways
- Net 60 means full payment is due 60 days after the start date, normally the invoice date.
- It frees up buyer cash and raises supplier financing cost. A supplier on thin margins may price the wait into the unit price.
- Pair it with an early payment option such as dynamic discounting or supply chain finance when suppliers are small.
- Check local law first. Some countries limit terms for small suppliers.
Free PDF and Excel: Net 60 negotiation brief and cash worksheet. Get it below
What net 60 means
Net 60 is a payment term meaning the full invoice amount is due 60 days after the start date, which is normally the invoice date.
It is twice as long as the standard net 30 and is common among larger buyers. The question for a procurement team is not what it means, it is whether the saving in buyer cash is worth what it does to the supplier.
A buyer moves 40 suppliers from net 30 to net 60. On annual spend of 24 million that is an extra 30 days of float, worth roughly 24,000,000 times 30 over 365, about 1.97 million of cash held longer. At an 8 percent cost of funds that is roughly 158,000 a year.
Five of the small suppliers raise prices by 1 percent to cover their own financing. The buyer gives back about 40,000 of the saving and learns that two suppliers can no longer fund the wait at all.
The trade
| Side | Gain | Cost |
|---|---|---|
| Buyer | Cash held longer, smoother working capital | Supplier price rises, supplier risk, strained relationships |
| Supplier | A bigger customer and steady orders | Funds the receivable for 60 days, may need credit |
| Both | A clear rule | Disputes if invoice start dates are loose |
Free PDF and Excel
Net 60 negotiation brief and cash worksheet
A one-page brief for a payment terms conversation, with a worksheet to compare the buyer gain with the supplier cost.
- Negotiation brief
- Buyer and supplier trade table
- Cash worksheet
- Excel calculator for float and financing cost
When net 60 makes sense
- The buyer is much larger and the supplier has other credit lines.
- The goods have a long resale cycle on the buyer's side.
- The supplier gets a way to be paid sooner at a fair rate.
- The industry norm is 60 days and a shorter term would not be competitive.
Make it fairer
- Offer early payment on request, with a discount that is fair to both sides.
- Exempt small suppliers or pay them faster.
- Define the start event as the invoice date, not the date a correct invoice is received.
- Run a monthly report of invoices over 60 days.
- Check statutory limits. India, for instance, caps terms for micro and small suppliers at 45 days. See payment terms.
Compare with net 45 and net 90, and consider 2/10 net 30 as an alternative that rewards speed.
- Statutory limits for small suppliers were checked.
- Suppliers have been asked about their cash position.
- An early payment route exists.
- Start event is the invoice date.
- You modelled the price effect, not just the cash gain.
Last checked: 19 October 2026. Illustrative arithmetic. Statutory late payment rules differ by country.
Frequently asked questions
What does net 60 mean?
Payment is due 60 days after the invoice date or other start event in the contract.
Is net 60 common?
It is common among larger buyers, though net 30 remains the most frequent term overall.
Who benefits from net 60?
The buyer, which holds cash longer. The supplier carries the cost unless it gets early payment.
Can a supplier refuse net 60?
Yes, it can negotiate shorter terms or price the wait into the unit cost.
Do any laws limit net 60?
Some countries cap payment periods for small suppliers or set late-payment interest. Check local law.