Payment Terms Matter for your Business
Every invoice sent has payment terms attached. These are the number of days you will allow to pass before expecting your customer to pay their invoice. Longer payment terms are a great way to extend credit to your best customers and show your trust in their ability to pay. Every business negotiates this on a customer by customer basis but tries to balance getting paid sooner vs meeting customer expectations.
Net 30 means something different for each customer
Sending an invoice with 30 days payment terms is a common practice amongst small to medium sized businesses. It doesn't mean you will be paid 30 days after you send the invoice. Often companies have "payment/billing cycles" where they only pay invoices at the end of the month. This means an invoice sent on March 15th will not be paid until April 30th. Not knowing if you will be paid on due date can be traced back to other company policies outside of your control.
Some countries have business practices that benefit the customer more than the seller. Italy has 90 days standard payment terms and companies can request 120 days. Large corporations are willing to be flexible to land big contracts and sales while small to medium sized companies may lose opportunities to trade due to risk.
How to manage Payment Term risk
One way to mitigate you payment term risk is to buy insurance for your invoices. By insuring the invoice(s) sent to your customer you are able to continue to trade with them while being able to provide the payment terms they ask for.