---
title: "Net 60 in Intro to Business"
description: "Net 60 is a payment term that gives a buyer 60 days to pay an invoice, a common form of trade credit in Intro to Business and wholesaling."
canonical: "https://fiveable.me/intro-to-business/key-terms/net-60"
type: "key-term"
subject: "Intro to Business"
unit: "Unit 16"
---

# Net 60 in Intro to Business

## Definition

Net 60 means the full invoice amount is due 60 days after the goods or services are delivered. In Intro to Business, it shows up as trade credit between wholesalers, suppliers, and buyers.

## What It Is

Net 60 is a payment term in Intro to Business that means the buyer has 60 days from the invoice date, or sometimes from delivery, to pay the full amount owed. It is a form of trade credit, so the seller is letting the customer buy now and pay later instead of demanding cash upfront.

You will usually see net 60 in wholesaling and other business-to-business sales. A wholesaler ships inventory to a retailer, then invoices the retailer with net 60 terms. That gives the retailer time to sell some of the goods before the bill comes due, which can make it easier to stock shelves without draining cash right away.

The term only describes when payment is due. It does not mean there is a discount, and it does not mean the invoice can be paid in pieces unless the contract says so. If the business pays after the due date, the seller may charge late fees, stop future shipments, or tighten credit terms.

Businesses use net 60 because it can help sales move faster, especially in competitive markets. Buyers like the breathing room, while sellers may accept the delay to win repeat customers. But the seller has to keep track of accounts receivable, because every unpaid invoice is money that has not yet come back into cash flow.

A simple example looks like this: a retailer receives $8,000 of inventory on March 1 with net 60 terms. The full payment is due around April 30. During those 60 days, the retailer can sell product and use the incoming revenue to pay the invoice, instead of paying from savings on day one.

The tradeoff is risk. If too many customers stretch payments or do not pay, the seller may need short-term financing such as a line of credit or invoice factoring to cover expenses. That is why net 60 is not just a date on a bill, it is also a cash management decision.

## Why It Matters

Net 60 connects two big Intro to Business ideas, wholesaling and short-term financing. In wholesaling, it helps explain how products move through the distribution channel without every buyer paying cash at the door. In finance, it shows why even profitable companies can run short on cash if invoices sit unpaid for too long.

This term also helps you think like a business owner. Offering net 60 can attract buyers, but it changes the seller’s risk. You have to decide whether the extra sales are worth waiting two months for payment, especially if you still need to pay employees, suppliers, rent, or shipping costs right away.

It also ties directly to accounts receivable. When a business sells on net 60, that sale becomes money owed, not money in hand. That distinction shows up all over business classes because it affects budgeting, borrowing, and whether a company can keep operating smoothly.

If you can explain net 60, you can usually explain the bigger pattern behind trade credit: businesses often use delayed payment as a tool, not just a courtesy.

## Connections

### Trade Credit

Net 60 is one specific trade credit term. Trade credit is the broader idea that a supplier lets a buyer pay later instead of immediately. If you see net 60 on an invoice, you are seeing trade credit with a 60-day repayment window.

### [Accounts Receivable](/intro-to-business/key-terms/accounts-receivable)

When a business sells with net 60 terms, the unpaid invoice becomes accounts receivable on the seller’s books. That means the sale has happened, but the cash has not arrived yet. This is why credit terms affect bookkeeping and cash planning, not just sales.

### Cash Flow

Net 60 can improve a buyer’s cash flow because the business keeps cash longer before paying the bill. For the seller, though, it can weaken cash flow if too many customers wait until the deadline or pay late. The same term can help one side and pressure the other.

### [Invoice Discounting](/intro-to-business/key-terms/invoice-discounting)

Invoice discounting is one way a business can turn unpaid invoices into cash sooner. That matters when customers have net 60 terms and the seller needs money before the invoice is due. The company uses the receivable as a financing tool instead of waiting the full 60 days.

## On the AP Exam

A quiz question might ask you to identify net 60 from an invoice, compare it with another payment term, or explain how it affects a wholesaler’s cash position. The move is usually to connect the due date to trade credit and accounts receivable, then explain who benefits and who carries the risk. If a problem gives you a sale date and asks when payment is due, count 60 days from the invoice or delivery date the question specifies. If a case study describes a retailer ordering inventory before peak season, net 60 is the clue that the buyer is using the supplier’s money for a short time. On an essay or class discussion, you may need to explain how delayed payment can help sales but strain liquidity if collections are slow.

## Net 60 vs Net 30

Net 30 and net 60 both mean the buyer pays the full invoice later, but the timeline is different. Net 30 gives the buyer 30 days, while net 60 gives 60 days. That extra month can make a big difference in cash flow, which is why businesses negotiate these terms carefully.

## Key Takeaways

- Net 60 means the buyer has 60 days to pay the full invoice amount.
- In Intro to Business, net 60 usually appears as trade credit in wholesaling and other business-to-business sales.
- For the seller, net 60 creates accounts receivable, which can improve sales but delay cash coming in.
- For the buyer, net 60 can protect cash flow by giving time to sell inventory before the bill is due.
- If customers pay late, the seller may need short-term financing to cover expenses while waiting for payment.

## FAQs

### What is Net 60 in Intro to Business?

Net 60 is a payment term that gives a buyer 60 days to pay an invoice in full. In Intro to Business, it is usually discussed as trade credit between wholesalers, suppliers, and business buyers. The clock starts on the invoice date or delivery date, depending on the agreement.

### Is Net 60 the same as paying in 60 days exactly?

Usually, yes, but the exact starting point depends on the contract. Some invoices count 60 days from the invoice date, while others count from delivery or receipt of goods. The wording matters because one week can change when the payment is actually due.

### How is Net 60 different from Net 30?

They are both trade credit terms, but net 60 gives the buyer twice as long to pay. Net 30 can tighten cash flow faster for the buyer, while net 60 gives more breathing room. Sellers often choose between them based on how much risk they want to accept.

### Why would a wholesaler offer Net 60?

A wholesaler may offer net 60 to attract buyers, move more inventory, and build long-term customer relationships. The downside is that the wholesaler has to wait longer for cash and keep track of receivables closely. If payments are slow, the wholesaler may need financing to bridge the gap.

## Related Study Guides

- [16.3 Obtaining Short-Term Financing](/intro-to-business/unit-16/3-obtaining-short-term-financing/study-guide/FGokTzdquldr9CrL)
- [12.2 Wholesaling](/intro-to-business/unit-12/2-wholesaling/study-guide/wzLwNQfJOL0DbvrR)

## About This Document

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- [llms-full.txt](https://fiveable.me/llms-full.txt): complete subject and unit listing
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