International Payment Terms: Net 30, 60, 90 - What to Accept

International Payment Terms: Net 30, 60, 90 - What to Accept

When your B2B company lands that coveted international client, the celebration often comes to an abrupt halt at one crucial question: what payment terms should you accept? With cross-border payments reaching US$190 trillion in 2023, and B2B transactions accounting for 80% of industry revenues, getting your international payment terms right isn't just important - it's mission-critical for your cash flow and business survival.

The stakes couldn't be higher. Accept terms that are too lenient, and you'll find yourself playing banker to clients halfway across the world. Be too restrictive, and you'll lose deals to competitors willing to offer more flexible arrangements. This comprehensive guide will help you navigate the complex landscape of international payment terms, understand when Net 30, 60, or 90 makes sense, and implement strategies to protect your business whilst scaling globally.

Understanding International Payment Terms Fundamentals

International payment terms define when and how your overseas clients will pay for goods or services. Unlike domestic transactions, international payments carry additional complexities including currency fluctuations, regulatory differences, and significantly higher processing costs.

📊 Average cross-border fees range from 1-3% for large corporates and over 5% for SMEs, making payment term decisions even more critical for smaller businesses.

The most common international payment terms include:

• Net 30: Payment due within 30 days of invoice
• Net 60: Payment due within 60 days of invoice
• Net 90: Payment due within 90 days of invoice
• Payment in Advance: Full payment before goods/services delivery
• Letter of Credit: Bank-guaranteed payment upon meeting specific conditions
• Documentary Collections: Bank-facilitated payment against shipping documents

Each term carries distinct risk profiles and cash flow implications. Net terms remain popular in B2B export contexts because they mirror domestic practices, but they expose exporters to currency risk, political instability, and collection challenges that don't exist in home markets.

The Real Cost of Extended Payment Terms

Before accepting any extended payment terms, you must understand their true cost to your business. Extended terms aren't just about waiting longer for payment - they represent a complex web of financial risks and opportunity costs.

Cash Flow Impact

Every day you wait for payment is a day your working capital is tied up in receivables rather than generating new business. For a company with £1 million in annual revenue, moving from Net 30 to Net 90 terms effectively removes £164,000 from your available working capital at any given time.

Currency Risk Exposure

International transactions expose you to foreign exchange fluctuations. A 5% currency swing against you on a £100,000 invoice means £5,000 in lost revenue - often more than your entire profit margin on the deal.

💡 Key Insight: Companies often focus on winning the deal but fail to calculate that extended payment terms can eliminate profitability entirely through currency and opportunity costs.

Collection Complexity

Domestic collections are challenging enough, but international collections involve different legal systems, languages, and cultural business practices. The cost and complexity of pursuing overdue international receivables often exceed the invoice value for smaller amounts.

When to Accept Net 30 Terms

Net 30 terms represent the sweet spot for many B2B international transactions, offering reasonable cash flow protection whilst remaining competitive in global markets.

Ideal Scenarios for Net 30

Established Markets with Strong Legal Frameworks Accept Net 30 terms when dealing with clients in countries with robust legal systems and established commercial practices. This includes most EU countries, Australia, Canada, and similar developed markets where collection mechanisms are reliable.

High-Value, Low-Volume Transactions For transactions above £50,000, Net 30 terms make more sense because the absolute payment amount justifies the working capital investment and potential collection efforts if needed.

Repeat Clients with Proven Track Records Once you've established a payment history with international clients, Net 30 terms become much safer. Track record trumps geography in risk assessment.

⚡ Pro Tip: Always request trade references and run credit checks through international credit agencies before accepting Net 30 terms with new international clients.

Risk Mitigation for Net 30 Terms

Even with Net 30 terms, implement these protective measures:

• Require personal guarantees from company directors
• Include retention of title clauses where legally enforceable
• Consider trade credit insurance for larger transactions
• Implement early payment discounts (e.g., 2% discount for payment within 10 days)

Evaluating Net 60 Terms: The Middle Ground

Net 60 terms often emerge as a compromise during contract negotiations, but they require careful evaluation of both client creditworthiness and your own cash flow capacity.

When Net 60 Makes Sense

Large Enterprise Clients Multinational corporations often have standardised payment processes that run on 60-day cycles. If you're supplying to Fortune 500 companies or their international equivalents, Net 60 may be non-negotiable but relatively safe due to their financial stability.

Seasonal Industries Some industries have natural cash flow cycles that make 60-day terms more reasonable. For example, agricultural businesses, tourism companies, or retail clients may need extended terms to align with their revenue cycles.

Strategic Market Entry When entering new international markets, offering Net 60 terms can provide competitive advantage whilst you establish market presence. However, this should be a temporary strategy with clear timelines for moving to more favourable terms.

Protecting Yourself with Net 60 Terms

Longer payment terms require stronger protective measures:

• Implement progress payments for larger projects
• Require letters of credit or bank guarantees
• Include currency hedging clauses
• Establish clear escalation procedures for overdue accounts

The Net 90 Decision: High Risk, High Reward?

Net 90 terms represent the outer limit of reasonable payment terms for most B2B transactions. They should only be considered under specific circumstances and with comprehensive risk mitigation.

📊 With B2B e-commerce payments expected to double from US$10 trillion to US$21.9 trillion by 2030, competition for international clients is intensifying, making extended terms more common but not necessarily wise.

Limited Scenarios for Net 90

Government Contracts Government entities often operate on extended payment cycles due to bureaucratic processes. However, government contracts also offer higher payment security, making the extended terms more acceptable.

Very Large Contracts with Milestone Payments For contracts exceeding £500,000, Net 90 terms become more viable if structured with milestone payments. Never accept Net 90 terms for the entire contract value upfront.

Strategic Partnerships Long-term strategic partnerships with major international clients may justify Net 90 terms as part of a broader relationship that includes volume commitments, exclusivity arrangements, or other valuable considerations.

Essential Protections for Net 90 Terms

Protection Type	Description	Cost	Effectiveness
Trade Credit Insurance	Covers 80-90% of losses	0.3-2% of invoice value	High
Letters of Credit	Bank-guaranteed payment	1-3% of transaction	Very High
Factoring	Immediate cash, third party assumes risk	2-5% of invoice value	High
Personal Guarantees	Director liability for company debts	Legal fees only	Medium

Alternative Payment Structures for International Trade

Rather than accepting standard Net terms, consider these alternative payment structures that better protect your cash flow whilst remaining competitive.

Progress Payment Structures

Structure payments around delivery milestones rather than single payment dates:

• 30% deposit upon order confirmation
• 40% upon shipment or service commencement
• 30% within 30 days of delivery completion

This approach dramatically improves cash flow whilst reducing risk exposure.

Currency-Hedged Terms

Offer extended payment terms but include currency hedging clauses that protect against exchange rate fluctuations. This makes longer terms more palatable for your business whilst providing payment flexibility to clients.

Technology-Enabled Faster Payments

📊 Trends for 2025 emphasise AI, blockchain, and ISO standards to reduce friction, with GTM professionals prioritising faster rails, APIs, and real-time systems to mitigate delays and costs.

Leverage modern payment technologies to offer competitive terms without the traditional risks:

• Real-time payment systems for immediate settlement
• Blockchain-based smart contracts for automated payments
• API-integrated payment solutions for seamless processing

Risk Assessment Framework for International Clients

Develop a systematic approach to evaluating which payment terms to offer different international clients.

Country Risk Assessment

Tier 1 Countries (Net 30 acceptable)

• Strong legal systems and commercial practices
• Stable currencies and political environments
• Established collection mechanisms
• Examples: Germany, UK, Australia, Canada

Tier 2 Countries (Net 30 with protections)

• Developing legal frameworks but stable governments
• Some currency volatility but convertible currencies
• Limited but functional collection options
• Examples: Poland, Czech Republic, South Korea

Tier 3 Countries (Require advance payment or L/C)

• Unstable political or economic environments
• Currency controls or high volatility
• Limited legal recourse for collections
• Examples: Various emerging markets with political instability

Client-Specific Risk Factors

Evaluate each client across these dimensions:

• Financial Stability: Credit ratings, financial statements, payment history
• Industry Stability: Cyclical vs. stable industries, regulatory environment
• Relationship Depth: Strategic importance, volume commitments, exclusivity
• Transaction Size: Absolute amounts, percentage of your revenue

Recommended Tools

Managing international payment terms and client relationships requires robust systems for tracking, analysis, and follow-up.

Key Takeaways

• Cross-border payment fees of 1-3% for corporates and over 5% for SMEs make payment term decisions critical to profitability
• Net 30 terms work best for established markets with strong legal frameworks and high-value transactions
• Net 60 terms require careful evaluation and should include progress payments or additional protections
• Net 90 terms should only be accepted for government contracts, very large deals with milestones, or strategic partnerships
• Alternative payment structures like progress payments and currency hedging often provide better risk-reward profiles than standard Net terms
• Country risk assessment should drive your payment term decisions as much as client-specific factors
• Modern payment technologies can enable competitive terms whilst reducing traditional risks associated with extended payment periods

Conclusion

Navigating international payment terms requires balancing competitive necessity with financial prudence. Whilst the global cross-border payments market projects growth to US$290 trillion by 2030, success belongs to companies that can compete internationally without compromising their cash flow or taking excessive risks.

The key lies in systematic risk assessment, appropriate protective measures, and leveraging technology to reduce traditional payment friction. By implementing the frameworks and strategies outlined in this guide, you can confidently accept international business whilst protecting your company's financial health.

If you're looking to build predictable pipeline and scale your GTM execution internationally, ProspectX can help. We deliver elite execution through data-driven strategies that book qualified meetings with international prospects whilst helping you implement robust processes for managing global client relationships and payment terms.