Net 30 terms tell the responsible party that they have 30 days from the date of the invoice to make their payment in full. Failing to meet those terms could harm your business credit.
Finding a fleet card or other business financial tools with net 30 terms is generally a good idea because it will align with payment terms for your invoices. From there, you can ensure that you have the cash flow you need to pay your bills.
Learn all about how payment terms work and understand considerations for payment term lengths by reading the information below.
How Do Net 30 Terms Work?
Invoices or credit arrangements with Net 30 terms necessitate settling the bill within a 30-day period from the invoice date. It’s crucial to comprehend the terms when enrolling for a fuel card.Here’s a look at what you’re agreeing to when you sign up for a fuel card with net 30 terms.
How Do You Calculate Net 30?
The interpretation of Net 30 terms is contingent on the specific fuel card you opt for. In certain scenarios, Net 30 implies a 30-day window for payment starting from the date the goods are received. Conversely, it can also mean 30 days from the invoice date, effectively extending the timeframe to the end of your fuel card’s billing cycle.
Typically, billing cycles span from the first day of the month to the last day, although alternative arrangements may have cycles from the 15th of one month to the 15th of the next. The crux of Net 30 terms lies in comprehending the precise conditions you’re consenting to and thoroughly examining the fine print. This ensures that your payments remain punctual and in adherence to the stipulated terms and timelines.
Do Net 30 Terms Include Weekends?
Net 30 terms include days regardless of whether those are weekends, holidays or traditional business days. Your fleet card bill should clearly outline the due date for the bill as well.
When Should I Pay My Net 30 Account?
It is a good idea to pay your net 30 accounts as soon as possible. In some cases, you might end up waiting for a client to pay your invoice so that you can have the cash flow you need to make other payments.
But don’t wait too long. If you do, you might end up harming your business credit, which could make it more challenging for you to get a business line of credit for other purposes.
Carrying credit on your fuel card can help you build business credit. However, that’s not to say you will want to pay off the card more often than once per month, but you also won’t want to miss a payment deadline.
Example of Net 30 Payment Terms
Still unsure how net 30 payment terms work for fleet fuel cards? Here’s an example that illustrates when you might spend the money and when the payment would then be due.
- Use your fleet fuel card for approved purchases on July 16.
- Receive the bill for your fleet fuel card on July 31.
- Payment for your fuel card is due no later than August 30, which is 30 days after you receive your monthly bill.
- Make your payment between July 31 and August 30 to avoid negative implications towards your business credit.
- Meanwhile, you can make new transactions between July 31 and August 30 that won’t be due until September 30 because your next bill will arrive on August 31.
Advantages of Net 30 Terms for Fleet Cards
Selecting a fleet card with net 30 payment terms can have many advantages. Here’s a look at what you can expect from these cards:
- Gives an opportunity to pay off the bill once you have the cash flow to do so
- Coordinates well with net 10 or 15 payment terms with your customers
- Ensures you have the funds necessary to pay your bills
- Decreases the chances of late credit payments
- Can help you build business credit
- Creates flexibility in your cash flow
Disadvantages of Net 30 Terms for Fleet Cards
While net 30 terms have many advantages, be aware of these disadvantages:
- Longer payment periods
- More challenging to keep track of
- Can make accounting more challenging
Things To Consider With Net 30 Payment Terms
If you’re evaluating a fleet fuel card with net 30 payment terms, take a moment to review top considerations for these types of cards.
Meeting Payments Due Dates
Before committing to a fleet card, it’s essential to confirm your capacity to adhere to payment due dates. While a net 30 card provides a buffer, allowing you to cover expenses after receiving customer payments, it’s imperative to maintain a diligent approach to bill management to safeguard your business credit and avoid potential complications.
Late Payment Percentage Fees
Failing to pay off your fleet card within the allotted time frame could also mean you’ll end up paying more for your expenses because you’ll also be responsible for late payment fees.
The percentage of these fees will vary based on which card you select but they could be as much as 10% for every month that the payment is overdue. Those fees will add up quickly and cause serious harm to your bottom line if you’re not careful.
Late Payment Minimum Fees
Review the card’s late payment minimum fees before signing up. This can mean that you’re responsible for paying a minimum on the card each month at a minimum without incurring a fee.
So, you might not have to pay it off in full on the due date, but failing to pay the minimum could result in late payment fees. The more times you fail to pay your minimum payment, the more you’ll pay in late fees for most fuel cards.
A Fuel Card That Ensures Business Cash Flow
If you were curious about net 30 terms, you should now have a better understanding of what to anticipate when using a fuel card with these terms. In the end, a fuel card featuring net 30 terms can be a valuable tool for enhancing your business’s cash flow.
This is because payment for expenses related to trucking jobs is not due until after you have received payment for the work. Review your fuel card options to find the one that will work best for your business based on its payment terms.
FAQ
You can pay net 30 early, though paying it before you even receive the invoice will do little to build your business credit.
An invoice or bill with term 5/15 net 30 means you get a five percent discount if you pay the invoice within 15 days.
If you miss a net 30 payment, you’ll likely have to pay a late fee or an added percentage of the total amount you owe.
Sign up for a FreightWaves e-newsletter to stay informed of all news and trends impacting supply chain careers and operations.
