What Are Net 90 Payment Terms? How Net 90 Works & How To Calculate

Net 90 payment terms is a payment method that allows buyers a full 90 days – three months – to pay their invoices from the date of issuance. This extended timeline represents a significant commitment from sellers and substantial cash flow flexibility for buyers. 

In this article, we’ll explore:

• What Net 90 payment terms are
• How they work in practice
• Step-by-step calculation methods
• Benefits and challenges of net 90 payment terms
• Trends in wholesale pricing and payment terms
• Best practices for managing extended credit successfully

Let’s dive into the world of Net 90 payment terms and how they can impact your business strategy.

What Are Net 90 Payment Terms?

Net 90 payment terms are a trade credit arrangement that gives buyers 90 days from the invoice date to pay the full amount owed without incurring penalties or interest charges. The term “net” signifies that the entire invoice amount is due without deductions (unless early payment discounts are specified), while “90” represents the number of days allowed for payment.

In practical terms, if a vendor issues an invoice on February 1st with Net 90 terms, the full payment is due by May 2nd. This three-month window provides buyers with substantial time to generate revenue from purchased goods or complete project milestones before the payment obligation arrives.

Key characteristics of Net 90 payment terms:

• Payment period typically begins on the invoice date, though some contracts specify delivery date or end-of-month start dates
• The 90-day period usually counts calendar days, not business days
• No interest accrues during the 90-day window if terms are met
• Often reserved for creditworthy, established customers with proven payment histories
• May include early payment discount incentives like 2/10 Net 90

Industries and situations commonly using Net 90:

• Government contractors working with federal, state, and local agencies that have standardized 90-day payment cycles
• Construction and manufacturing for large projects with extended production and installation timelines
• Healthcare suppliers providing to hospitals and medical facilities with complex procurement processes
• Enterprise wholesale distributors serving major retail chains and large-volume buyers
• International trade where shipping, customs clearance, and inspection require extended timeframes

As the B2B landscape continues evolving toward longer payment terms, businesses need modern tools that simplify the complexity of managing Net 90 accounts. Whether you’re just beginning to explore extended payment terms or looking to optimize existing processes, the right combination of policies, technology, and financial strategy makes Net 90 manageable and profitable.

How Net 90 Payment Terms Work

The mechanics of Net 90 payment terms involve several critical steps that protect both parties and ensure smooth transactions throughout the extended payment period.

The complete Net 90 process:

Step 1: Credit approval and qualification

Before extending Net 90 terms, sellers conduct thorough due diligence on potential customers. This typically includes:

• Comprehensive credit checks through business credit bureaus (Dun & Bradstreet, Experian Business)
• Review of financial statements, tax returns, and bank references
• Trade references from the buyer’s other suppliers
• Analysis of the buyer’s payment history, business stability, and industry reputation

Not all businesses qualify for Net 90 terms. Sellers often require minimum credit scores, established operating histories (typically 2+ years), and proof of adequate cash flow or assets. New customers usually start with shorter terms or deposits and graduate to Net 90 after demonstrating reliability.

Step 2: Contractual agreements

Once approved, the payment terms must be documented clearly in:

• Master service agreements or vendor contracts
• Individual purchase orders
• Invoice terms and conditions
• Credit applications with signed acknowledgments

These documents specify when the 90-day clock starts, acceptable payment methods, late payment penalties, early payment discount options, and dispute resolution procedures.

Step 3: Invoice issuance

When goods are delivered or services completed, the seller issues a detailed invoice that prominently displays:

• Invoice date (the starting point for the 90-day period)
• Due date (calculated as 90 days from invoice date)
• Payment terms clearly stated as “Net 90” or “Payment Due in 90 Days”
• Total amount due
• Early payment discount details if applicable (e.g., “2/10 Net 90”)
• Payment instructions and accepted methods

Step 4: Early payment discount window

Many Net 90 arrangements include early payment incentives. For example, with 2/10 Net 90 terms:

• Buyers can take a 2% discount if payment is submitted within 10 days
• After day 10, the discount expires but buyers still have until day 90 to pay the full amount
• This structure rewards buyers who can access cash quickly while maintaining flexibility for those who need the extended period

Step 5: Payment tracking and reminders

Throughout the 90-day period, sellers typically:

• Monitor aging accounts receivable reports
• Send payment reminders at intervals (e.g., 60 days, 75 days, 85 days before due date)
• Maintain communication with buyers to address any invoice questions or disputes
• Update accounting systems to reflect payment status

Step 6: Payment or late payment management

On or before day 90, buyers submit payment through agreed-upon methods (ACH, wire transfer, check, or credit card if accepted). If payment isn’t received:

• Late fees are applied according to contract terms (commonly 1.5% per month)
• Collections processes begin with escalating contact attempts
• Future orders may be suspended or put on hold
• Severely delinquent accounts may be sent to collections agencies or legal counsel

The role of early payment discounts:

Early payment discounts within Net 90 terms (like 2/10 Net 90 or 1/15 Net 90) serve multiple purposes:

• They incentivize faster cash conversion for sellers
• They provide cost savings for buyers with available liquidity
• They reduce the effective cost of financing for buyers (a 2% discount for paying 80 days early equals roughly 9% annual interest)
• They help differentiate between cash-rich buyers and those needing full payment flexibility

Understanding these mechanics helps both buyers and sellers navigate Net 90 payment terms successfully, minimizing disputes and maximizing the benefits of extended credit arrangements.

What is the Difference between Net 90 and Net 60?

Feature	Net 60 Payment Terms	Net 90 Payment Terms
Payment Due Date	Payment due within 60 days from invoice date	Payment due within 90 days from invoice date
Common Usage	Common in wholesale, manufacturing, projects with moderate length	Used in large-scale projects, industries with long production or sales cycles
Cash Flow Impact (Buyer)	Provides moderate flexibility in cash flow management	Offers extended time to manage cash flow and capital outflows
Cash Flow Impact (Seller)	Delayed payment can slightly strain cash flow	Long wait for payment can significantly strain cash flow and working capital
Risk of Late Payment	Higher risk compared to Net 30 but lower than Net 90	Increased risk due to extended currency risk and longer payment window
Credit Approval	Usually requires moderate credit checks	Requires stronger credit approval due to higher risk
Early Payment Discounts	Often paired with discounts like 2/10 Net 60	Early payment discounts like 2/10 Net 90 incentivize faster payments
Administrative Burden	Moderate management and monitoring effort	Higher monitoring, collections, and administrative costs
Business Use Cases	Suitable for medium-term payment cycles	Best for long-term payment terms and large transactions
Buyer Relationship Impact	Encourages ongoing business with customer flexibility	Builds strong loyalty but can expose seller to greater financial risk

How to Calculate Net 90 Payment Terms and Discounts

Accurate calculation of payment due dates and early payment discounts ensures both parties understand their obligations and opportunities under Net 90 terms.

Calculating the Net 90 payment due date:

Step 1: Identify the invoice date (this is your starting point)

Step 2: Add 90 calendar days to the invoice date

Step 3: Determine the exact due date, accounting for varying month lengths

Example calculation 1:

• Invoice date: March 15, 2025
• Add 90 days: June 13, 2025 (payment due date)
• Breakdown: March (16 days remaining) + April (30 days) + May (31 days) + June (13 days) = 90 days

Example calculation 2:

• Invoice date: November 30, 2025
• Add 90 days: February 28, 2026 (payment due date)
• Note: This crosses year-end and accounts for shorter months

The key to success with Net 90 calculations is consistency, clear communication, and leveraging technology to minimize errors and missed discount opportunities.

Benefits of Offering Net 90 Terms

While Net 90 payment terms require significant financial commitment from sellers, they deliver substantial strategic advantages when implemented thoughtfully.

For buyers:

Supporting cash flow and financial planning: 

Net 90 terms provide buyers with a full quarter to manage their cash position between receiving goods and making payment. This is particularly valuable for businesses with:

• Seasonal revenue patterns that don’t align with constant purchasing needs
• Long production or sales cycles where products must be manufactured or sold before generating income
• Project-based work where client payments arrive on extended schedules
• Capital allocation strategies that prioritize growth investments over immediate vendor payments

Facilitating large orders and complex projects: 

When purchasing significant inventory volumes or expensive equipment, the 90-day payment window allows buyers to:

• Place larger orders without depleting cash reserves
• Take advantage of volume discounts that require bigger commitments
• Fund multiple projects simultaneously without overextending financially
• Bridge timing gaps between project start and client payment milestones

For sellers:

Gaining competitive advantage: In markets where Net 30 or Net 60 is standard, offering Net 90 can be a powerful differentiator:

• Win contracts with government agencies and large enterprises that require or strongly prefer 90-day terms
• Attract high-value customers away from competitors with less flexible payment policies
• Position your business as a strategic partner rather than just a vendor
• Command premium pricing that offsets the cost of extended credit

Building long-term business relationships: Extended payment terms foster deeper partnerships:

• Demonstrates trust and confidence in the customer’s financial stability
• Creates switching costs – customers won’t want to lose favorable payment terms
• Opens doors for negotiations on other contract elements (volume, exclusivity, pricing)
• Leads to referrals and recommendations within industry networks

Enabling wholesale channel growth: For distributors and wholesalers, Net 90 terms can unlock entire market segments:

• Access enterprise retail accounts that mandate extended terms in vendor agreements
• Compete effectively in industries where 90-day terms are table stakes
• Support customers’ business models that depend on extended payment flexibility
• Scale revenue without being constrained by conservative credit policies

Risk-adjusted returns: When properly underwritten, Net 90 customers often represent lower credit risk:

• Only the most financially stable businesses qualify for 90-day terms
• Large corporations and government entities, while slow to pay, rarely default
• The rigorous approval process filters out high-risk accounts
• Premium pricing on Net 90 sales can exceed the cost of capital and default risk

Net 90 payment terms aren’t right for every business or every transaction, but when strategically deployed with creditworthy customers, they create mutual value that strengthens business relationships and drives sustainable growth.

Trends in Wholesale Pricing and Payment Terms

The wholesale industry has experienced significant evolution in payment term practices, with Net 90 becoming increasingly common for specific transaction types and customer segments.

The shift toward extended payment terms:

Industry data reveals that average B2B payment terms have lengthened considerably over the past decade. While Net 30 remains the most common term, the percentage of transactions using Net 60 or Net 90 has grown from approximately 15% in 2015 to over 28% in 2024. This trend reflects several converging forces:

Buyer market power: Large retailers and enterprise buyers increasingly dictate payment terms to suppliers. Major corporations like Walmart, Amazon Business, and Target have standardized 90-day payment cycles for many vendor categories, forcing suppliers to accept these terms or lose access to massive sales channels.

Government contracting norms: Federal, state, and local government agencies commonly operate on 90-day payment cycles due to procurement regulations and budget approval processes. As government procurement shifts increasingly to small and medium-sized businesses, more suppliers must adapt to these extended timelines.

Tiered pricing based on payment terms: Progressive wholesalers now offer explicit pricing menus: pay upfront for the lowest price, Net 30 for mid-range pricing, or Net 90 for the highest price. This transparency helps buyers make informed decisions based on their cash flow situation.

Early payment discount strategies: Rather than simply offering extended terms, savvy wholesalers structure 2/10 or 3/15 discount options within Net 90 agreements. This attracts cash-rich buyers with discounts while accommodating cash-constrained buyers willing to pay full price.

Case study example:

A regional food distributor serving independent grocery stores and restaurants traditionally offered Net 30 terms. In 2023, facing competition from national distributors offering Net 60, they restructured their payment terms:

• Introduced a three-tier pricing system: prepay (-2%), Net 30 (base price), Net 90 (+5%)
• Added 2/15 Net 90 early payment discount option
• Implemented automated credit approval for Net 90 based on credit scores and history

Results after 12 months:

• 35% of customers opted for Net 90, driving a 22% increase in average order size
• 40% of Net 90 customers took the early payment discount, improving cash flow
• Overall revenue increased 18% while maintaining similar profit margins
• Days sales outstanding (DSO) increased from 33 to 47 days but remained manageable with new factoring facility

Best Practices for Managing Net 90 Terms without Affecting your Cash flow

Successfully implementing Net 90 payment terms requires systematic processes, clear policies, and appropriate technology infrastructure.

Establish clear communication upfront:

• State payment terms explicitly in all documentation: quotes, proposals, contracts, purchase orders, and invoices
• Specify the exact due date, not just “Net 90,” to eliminate ambiguity
• Clarify when the 90-day period begins (invoice date, delivery date, or month-end)
• Document early payment discount details with clear deadline dates
• Provide multiple payment methods and detailed payment instructions
• Include late payment penalties, interest rates, and collections policies in writing

Implement robust credit evaluation processes:

• Require formal credit applications from all customers requesting Net 90 terms
• Run comprehensive credit checks through D&B, Experian Business, or Equifax
• Request and verify trade references from at least three current suppliers
• Review financial statements, tax returns, and bank references for significant accounts
• Establish minimum credit score requirements (typically 650+ for Net 90)
• Require personal guarantees from owners of smaller businesses
• Set clear credit limits based on financial capacity, not just order history

Leverage technology and automation:

• Use cloud-based accounting software (QuickBooks, Xero, NetSuite) with automated payment term tracking
• Set up automated email reminders at key intervals: 30 days out, 14 days out, 5 days out, due date, and overdue
• Implement customer self-service portals where buyers can view invoices, payment history, and available credit
• Utilize electronic invoicing (EDI) for faster delivery and processing
• Consider platforms like B2Bridge for Shopify merchants to manage wholesale Net 90 terms seamlessly within your e-commerce ecosystem
• Deploy AI-powered credit monitoring tools that alert you to customer financial deterioration

Monitor and manage aging receivables actively:

• Review aging reports weekly, categorizing receivables by 30-day buckets
• Establish escalation procedures: friendly reminder, phone call, formal notice, collections referral
• Contact customers immediately when payments become even one day late
• Document all communication attempts and customer commitments
• Suspend future orders for accounts 15+ days past due until payment is received
• Use data analytics to identify payment pattern trends and adjust credit policies accordingly

By implementing these best practices systematically, businesses can offer Net 90 payment terms confidently while protecting cash flow and minimizing bad debt exposure.

B2Bridge: Streamlining Net Payment Terms for Wholesale Businesses

Managing Net 90 payment terms doesn’t have to mean drowning in spreadsheets, manual tracking, and administrative headaches. B2Bridge transforms wholesale management on Shopify, making extended payment terms as simple as managing retail transactions.

Simplify wholesale management: B2Bridge automates Net 90, Net 60, Net 30, and custom payment term tracking for every customer. Set credit limits, monitor aging receivables, and manage due dates – all within your familiar Shopify admin interface. No more juggling multiple systems or wondering which invoices are coming due.

Protect your pricing strategy: Keep wholesale prices hidden from retail shoppers while displaying personalized pricing to approved B2B customers. Support customer-specific terms, volume discounts, and early payment incentives without complex workarounds or manual price adjustments.

Offer a seamless buyer experience: Your B2B customers get a professional, self-serve shopping experience with transparent payment term visibility, quick reordering capabilities, and saved carts. This modern buying experience builds loyalty and drives higher repeat order rates.

Close more wholesale deals: Built-in quote requests and negotiation tools help you convert prospects into customers faster. Generate professional quotes, negotiate custom terms including Net 90 payment options, and convert quotes to orders with one click – all without leaving Shopify.

Ready to stop wrestling with Net 90 payment term management and start growing your wholesale business? Discover how B2Bridge brings enterprise-level wholesale capabilities to Shopify merchants.

FAQs About Net 90 Payment Terms

What exactly are Net 90 payment terms?

Net 90 payment terms mean the buyer must pay the full invoice amount within 90 days of the invoice date (or other specified starting point). “Net” indicates the full amount is due without deductions unless early payment discounts apply. This gives buyers three months to pay while providing sellers with predictable payment timing.

How do Net 90 terms differ from Net 30 and Net 60?

The primary difference is the length of time buyers have to pay: Net 30 provides 30 days, Net 60 provides 60 days, and Net 90 provides 90 days. Net 30 is the B2B industry standard suitable for most transactions. Net 60 is common in wholesale for mid-sized orders. Net 90 is typically reserved for large enterprises, government contracts, and high-value transactions where extended cash flow flexibility justifies the seller’s increased working capital investment.

Can Net 90 terms include early payment discounts?

Yes, absolutely. Common structures include 2/10 Net 90 (2% discount if paid within 10 days) or 1/15 Net 90 (1% discount if paid within 15 days). Some sophisticated agreements offer tiered discounts like 2/10 1/30 Net 90, providing multiple discount opportunities. These incentives help sellers accelerate cash collection while maintaining competitive extended terms.

How do businesses qualify for Net 90 credit terms?

Qualification for Net 90 terms typically requires:

• Strong business credit scores (typically 650+)
• Established operating history (usually 2+ years in business)
• Positive trade references from current suppliers
• Solid financial statements demonstrating adequate cash flow and assets
• Clean payment history without recent defaults or late payments
• Sometimes personal guarantees from business owners for smaller companies

New customers usually start with shorter terms and graduate to Net 90 after demonstrating reliable payment patterns over 6-12 months.

Conclusion

Net 90 payment terms represent one of the most significant credit decisions in B2B commerce – offering buyers valuable cash flow flexibility while requiring sellers to make substantial financial commitments. 

Ready to transform how you manage Net 90 payment terms and scale your wholesale operations with confidence? Explore how B2Bridge brings enterprise-level wholesale management to Shopify, making extended payment terms as simple as managing retail transactions. Schedule your demo today and see the difference that purpose-built wholesale technology can make for your business.