What is Net 90?
Net 90 means payment is due within 90 days of the invoice date — the longest common B2B payment term. Learn when Net 90 is used, how to protect your cash flow, and how to negotiate shorter terms.
What Is Net 90?
Net 90 (also written N/90) is a payment term meaning the full invoice amount is due within 90 calendar days of the invoice date. If you issue an invoice on January 1, the due date under Net 90 terms is April 1 — nearly a full quarter later. Net 90 is the longest payment term in common commercial use. It appears primarily in: - Government and public sector contracts — federal, state, and local procurement often operates on 60–90 day cycles mandated by statute or regulation - Large enterprise procurement — Fortune 500 companies with complex multi-level AP approval chains - Import/export and trade finance — international transactions with extended shipping and customs timelines - Construction and project-based contracts — large public works projects where owner-contractor payment cycles cascade through subcontractors For freelancers and small businesses, Net 90 is rarely a voluntary choice. It is almost always a client-imposed requirement where the alternative is losing the contract.
The Cash Flow Reality of Net 90
Net 90 is the most demanding payment term for seller cash flow. A freelancer billing $8,000/month carries dramatically different receivables balances depending on their payment terms: | Payment Term | Average Outstanding Receivables ($8K/month) | |---|---| | Net 7 | ~$1,900 | | Net 30 | ~$8,000 | | Net 60 | ~$16,000 | | Net 90 | ~$24,000 | On $8,000/month revenue under Net 90 terms, approximately $24,000 is perpetually locked in outstanding invoices at any given time. This is 3 full months of revenue sitting in accounts receivable — money that cannot pay rent, cover software costs, or fund business investment. Few freelancers can absorb this level of receivables float without either a significant cash reserve or external financing.
Early Payment Discounts: 3/30 Net 90
The standard early-payment discount structure for Net 90 is "3/30 Net 90": - The client pays within 30 days → they receive a 3% discount - Otherwise, the full amount is due in 90 days Example on a $15,000 invoice: - Pay by Day 30: $14,550 (3% discount = $450 savings) - Pay by Day 90: $15,000 (full amount) From the seller's perspective, offering a 3% discount costs less than 3 months of interest on a business line of credit (typically 6–12% annually), so it's often worth offering. Enterprise treasury departments are especially receptive to early-pay discounts — reducing payables is a key metric for corporate CFOs.
Strategies for Managing Net 90 Terms
Require a significant deposit. A 30–50% deposit before work begins reduces your Net 90 exposure dramatically. On a $20,000 engagement with a $10,000 deposit, only $10,000 is waiting 90 days. Milestone billing with mixed terms. Structure invoicing so earlier phases use shorter terms and only the final invoice is Net 90. Phase 1 on Net 30, Phase 2 on Net 45, final delivery on Net 90 — clients often accept this without issue. Invoice factoring. Factor companies purchase your Net 90 receivables for immediate cash, typically at a 1–5% discount rate. For large invoices from creditworthy enterprise clients, factoring is a cost-effective cash flow tool. On a $50,000 Net 90 invoice, a 3% factoring fee costs $1,500 for the ability to receive cash today instead of 90 days from now. Build a cash reserve before accepting. The minimum prudent reserve for Net 90 clients: 3–4 months of your monthly operating expenses. Accept Net 90 clients only when you have that cushion. Price Net 90 higher. The 90-day cash float has a real cost — equivalent to carrying a 90-day loan on the invoice amount. Price Net 90 engagements 3–5% above your standard rate to compensate.
Net 90 vs. Other Payment Terms
| Term | Days | Cash Flow Impact | Best For | |---|---|---|---| | Net 7 | 7 | Minimal | Most freelance work | | Net 30 | 30 | Moderate | Corporate clients | | Net 60 | 60 | High | Enterprise/government | | Net 90 | 90 | Very high | Government/large enterprise | Net 90 is appropriate only when: 1. The client is large enough that the relationship justifies the float 2. The invoice amount is large enough to justify the cash flow disruption 3. You have the financial reserves or financing tools to bridge 3 months without payment
Tracking Net 90 Invoices
With Eonebill, Net 90 invoices are tracked automatically — due dates are calculated from the invoice date, and automated reminders are sent at intervals you configure. A good reminder schedule for Net 90: Day 60 (early warning), Day 80 (approaching due date), Day 91 (overdue notice if unpaid). Related: Net 60 Explained · Net 30 Explained · Payment Terms Guide · Invoice Templates