Net 90
Does Net 90 mean 90 business days?
No. It generally means 90 calendar days from the invoice date unless the contract explicitly states a different trigger, such as shipment or receipt.
Can the term start on receipt instead of the invoice date?
Yes, but only if the invoice or contract explicitly states that the countdown starts on another event such as shipment or receipt. Without that wording, the default is the invoice date.
What does Net 90 mean for accounting?
For the buyer, it creates an accounts payable item due in 90 days; for the seller, it creates an accounts receivable item expected in 90 days.
Net 90 is a trade-credit payment term requiring the buyer to pay the full invoice amount within 90 calendar days of the invoice date, unless the contract specifies a different trigger such as shipment or receipt. In manufacturing and warehousing, it lets the buyer receive goods now and defer cash outflow for about three months, aligning material consumption and customer collections before payment is due.
In a manufacturing facility, Net 90 appears on purchases for raw materials, MRO supplies, packaging, and components. When goods arrive, the warehouse receives and puts them away, the invoice is posted in the accounts payable system, and payment is scheduled 90 days from the invoice date unless the contract states another start point. Procurement teams rely on this window to keep inventory flowing without immediate cash outlay, while production can consume the material or convert it into WIP before the supplier is paid. The practical challenge is managing payables aging: teams must track each vendor's invoice date, avoid assuming the countdown starts at receipt or PO approval, and coordinate purchasing with finance so clustered 90-day obligations don't create a cash crunch. Larger B2B orders and longer operating cycles use Net 90 because lead times, WIP conversion, and downstream billing can span months.
Invoice-date mismatch: Payables teams assume the 90 days begin on goods receipt or PO approval, not on the invoice date. This causes late payment, supplier disputes, and holdbacks on future shipments whenever the contract uses a different trigger.
Cash-flow compression: A plant over-orders raw materials because Net 90 looks like free time. When multiple vendor terms cluster, AP obligations pile up and create a funding crunch that interrupts purchasing, receiving, and production releases.
Discount/term misreading: In terms like 2/10 net 90, buyers miss the early-pay discount window or post invoices incorrectly. This leaves money on the table and triggers vendor reconciliation errors, straining supplier relationships.