Net Payment Terms in Distribution and Wholesale

What Are Net Payment Terms in Distribution?

In distribution and B2B trade, net payment terms specify how long a buyer has to pay an invoice after the date of billing. These terms outline the payment window agreed upon between a supplier and a customer — for example, Net 30 means payment is due within 30 days of the invoice date.

Net terms are common in wholesale and CPG because they balance flexibility and cash flow. They allow buyers to receive goods, sell them, and then settle invoices within an agreed period.

For example, a beverage distributor may buy from a manufacturer under Net 45 terms, giving the distributor 45 days to pay after delivery. This arrangement helps manage working capital while ensuring consistent supply.

In short, net payment terms define the financial rhythm of B2B relationships — determining when money moves, how credit is extended, and how cash flow stays stable across the supply chain.

How Net Payment Terms Work in Practice

Net terms function as short-term credit agreements between sellers and buyers. They are typically written on invoices as “Net 15,” “Net 30,” or “Net 60,” indicating the number of days allowed before payment is due.

Here’s how the process usually works:

1. Agreement: Both parties negotiate credit terms before any order is placed.

2. Invoice Issuance: The seller ships goods and sends an invoice listing the due date.

3. Grace Period: The buyer uses the agreed time window to sell inventory or arrange funds.

4. Payment Submission: The buyer pays within or before the due period.

5. Reconciliation: The seller records payment and closes the account cycle.

For instance, a CPG brand might grant distributors Net 60 terms during a major product rollout, allowing them to stock new items without upfront payment. In turn, the brand benefits from larger initial orders and improved market coverage.

Some agreements also include early payment discounts — for example, “2/10 Net 30” means the buyer gets a 2% discount if payment is made within 10 days, even though the total is due in 30.

Key Benefits for Businesses and Operations

Managing net payment terms effectively brings financial and operational advantages for both sides of the trade relationship.

1. Improved Cash Flow Management

Suppliers forecast income accurately while buyers plan expenses with confidence.

2. Stronger Business Relationships

Clear, fair terms foster trust and encourage repeat orders between partners.

3. Reduced Payment Disputes

Standardized terms minimize confusion and keep both finance teams aligned.

4. Better Sales Volume

Longer payment windows can motivate buyers to purchase more upfront.

5. Enhanced Financial Stability

Structured timelines prevent late payments from disrupting supply and production cycles.

In practice, balancing payment flexibility and cash discipline ensures the entire supply chain runs smoothly.

How SimplyDepo Helps Manage Net Payment Terms

SimplyDepo allows distributors, brands, and field teams to manage payment terms directly within its connected platform. Finance and sales teams can track invoices, apply discounts, and monitor outstanding balances in real time.

With Order Management and Distribution Management features, SimplyDepo automatically applies credit terms per customer, ensuring accuracy across every order.

Key platform capabilities include:

• Customizable net term settings (Net 15, Net 30, etc.)

• Automated invoice generation and tracking

• Real-time aging reports for overdue payments

• Integration with accounting and ERP systems

• Alerts for upcoming and late payments

By digitizing credit and billing workflows, SimplyDepo helps businesses maintain healthy cash flow while minimizing manual errors and payment delays.