Net 30

[John Scott]

I just thought I would publicly denounce Net 30 as a concept and say that anybody offering Net 30 terms should be publicly beaten and mocked. I feel the same about people who ask for Net 30 terms.

[BingoBalls]

Haha why would that be? net30 = hassle?

[John Scott]

As far as I can see, it is just a way for deadbeats to get free stuff. Like all those deadbeat web hosts who go around asking for Net 30 terms on advertising. Why would they even ask for Net 30 is they had the money and intended to pay?

[factoring]

I've seen a lot of companies abuse net 30, but for some situations it is ideal. Take a shopping related affiliate program. This would be ideal for the situation of returned products. It sounds like what you are referring to is abuse of net 30, which I completely agree they should be publicly stoned.

[nks]

erm.... what exactly is a Net 30?

It seems like I have been away for 1 month, and a lot of things have changed...

[WagerX]

Originally Posted by nks

erm.... what exactly is a Net 30?

It seems like I have been away for 1 month, and a lot of things have changed...

I had to look it up too. Here's some info: http://en.wikipedia.org/wiki/Net_30

I see what the concept is about, but the fundamental flaw is that when you pay with a credit card you can claim fraud when you don't receive your goods or services. It's already secure.

Yea.. so flog'em with gusto John!

[BingoBalls]

Originally Posted by John Scott

Like all those deadbeat web hosts who go around asking for Net 30 terms on advertising. Why would they even ask for Net 30 is they had the money and intended to pay?

That I can totally see. Net30 terms on advertising? That IS ridiculous.

The only time I've seen Net30 in good use was when I was selling Cisco equipment. We would flip the hardware to a reseller who then flips it onto an end-user. Of course a D&B check would always be done before handing out a Net30 to anyone.

Next time anyone asks you for Net30 request what their D&B score is and see what response you get.

[ToddW]

NET30 good for only one person

[nks]

Now I understand.... after reading the definition from Wiki.

Alright, only one word.... that NET30 is crap!

[jmoe]

How about payment on receipt of the service - there is no reason to use Net30 for most online businesses...

[Timinator]

Originally Posted by ToddW

NET30 good for only one person

and it ain't the guy that is waiting for the money!

I get that from some companies I did comm work for, I can't explain to them that I have to pay for gas, wire, and material out of my pocket now then wait 30 days for you to pay me? I do that with a few companies, but man it puts a strain on the capital! Linkshare is net 90. Keypoint communications is net when ever they feel like typically a year!!!! I guess it's better then net never like some other people I've dealt with.

[Shawn]

I agree Net 30 can be abused badly. In our photo studio we did photography for 3 events for a major radio station in the summer of '06 and it totaled about $15k worth of coverage. The director of marketing there said the accounting department only does net 30 (and basically said if that's a problem we'll go somewhere else). So not wanting to lose his biz I accepted it and long story short, it was almost 6 months before we got paid and only because I had to have our attorney send them a letter.

On the flipside of things, there are places that I advertise with that offer (on their own) net 30/60 terms to entice me to spend more, which honestly I usually do. So in that case it works for both of us. But I never abuse it.

Then on the revenue side of things, there are places that pay it's affiliates on Net 30/45/60 terms. Which to me sounds like, we'll pay you, but we wanna make interest on the money we owe you first, then we'll pay you. You ever notice that big boy adult/casino affiliate programs that pay out MILLIONS PER DAY, have 24-48 hour net terms. Why can't everyone be like that?

[Webfu]

Net 30 might be bollocks but its come to be a business standard in America. What do you do when a client says " I have net 30 to pay this bill right ? "

Do you tell them no sucker, you have to pay it now or else?

One of you might be able to get away with a $10,000 retainer to satisfy that but when your trying to build up a client list ~ offering net 30 makes a lot of people happy.

[GuyFromChicago]

Originally Posted by BingoBalls

That I can totally see. Net30 terms on advertising? That IS ridiculous.

It's more than common in the US...every major ad agency is net 30, some even more. I think it's a hassle but it is what it is. I work some clients who won't work with people who don't offer terms. Will I decline $xx,xxx in business because I have to wait 30 or so days to get paid...nope. Is it annoying...you bet.

[Timinator]

Of note as well, a lot of it for me is if I have done biz with them, and I know they WILL pay at all, or in the 30 days they say they will. I hate having to chase after Money! I'm getting to the point if people want extra time to pay then they get charged extra.

[Hostnetric]

The only time I would consider net 30 terms or something similar is if the account was large and a company thats reputation was impeccable and well respected. For all other people it would have to be payment first.

[Webfu]

The large retainer up front is a good way around net 30. Then the monthly balance could come from there. Your work or name has to speak for itself before you can demand that type of payment versus traditional payment practices. Personally I like to get the client's credit card and ding them every month on a certain date after we have turned in our projects. That way there is no waiting. Even better is auto-mated recurring billing that you can do with such services as paypal and authorize.net. Set up the recurring billing in advance with your client to avoid the net 30 perhaps.

[lordspace]

Originally Posted by nks

Now I understand.... after reading the definition from Wiki.

Alright, only one word.... that NET30 is crap!

No, if used correctly.

Let me give you an example:

if I start an affiliate program and give 36% for each sale, several days after the purchase is made, customer may requests his money back, so then I have to pay 36% commission and not making any profits.

That's not fair.

I think that big companies abuse Net 30 because of that:
http://beginnersinvest.about.com/cs/.../a/051701a.htm

[Hostnetric]

Originally Posted by lordspace

No, if used correctly.

Let me give you an example:

if I start an affiliate program and give 36% for each sale, several days after the purchase is made, customer may requests his money back, so then I have to pay 36% commission and not making any profits.

That's not fair.

I think that big companies abuse Net 30 because of that:
http://beginnersinvest.about.com/cs/.../a/051701a.htm

Very good example. You are right in that many large companies are very abusive of these types of terms. It is not that they do not have the money to pay their bill with you, but because

1. they are maximizing their ROI by gaining interest on the money at your expense.

2. some of them have other companies that pay them net30 terms as well and they wait until they receive a certain percentage of their money to pay their bill to you.

Does this mean that net30 is bad? No it does not. It simply means you must be careful who you choose to extend these terms to and that you are able to financially wait up to 60 days to receive your money. 60 days is not uncommon for a 30 day net payment plan.

You simply have to make sure that your plan has penalties in place for going beyond the 30 day terms to deter this and also to cover your extra expense of carrying this balance. You might also give a discount to customers who pay early before their 30 day extension of credit runs out.

An example might be a 5% discount if paid immediately and 2.5% if paid within 21 days. Now I would only extend these terms to large companies since they normally will commit to purchasing more of your products and services then your average customer will.