Net 15 Payment Terms: When to Offer and How to Enforce Them
Net 15 gives a customer 15 days to pay in full. It is the right term for new accounts, slipping accounts and small recurring invoices, the wrong one for a buyer who pays on a fixed cycle, and it only works when the terms are signed and someone follows up on day 16.
When a credit manager tells me a customer is always late, the first thing I ask is what the terms are and where they are written down. More often than I would like, the answer is net 30 because the invoice template said so, for every customer, since the day the company opened. Terms chosen that way are a habit, and a habit is hard to enforce, because nobody ever decided what should happen on day 31.
Net 15 is the term I see chosen on purpose more than any other, which is why it deserves a close look. It is short enough to feel like a deadline and long enough that a working payables department can meet it. Offered to the right accounts, in writing, and followed up the day it is missed, it shortens the time your money spends in someone else's bank account. Offered to the wrong accounts, or printed on an invoice and never enforced, it only fills your aging report with invoices that look late. Here is how I would tell the two apart.
Key takeaways
- Net 15 means the full invoice amount is due 15 calendar days after the invoice date, unless your written terms start the clock somewhere else. On day 16 the invoice is past due.
- Offer net 15 to new accounts, accounts moving up from cash terms, customers whose payments have started to slip, and small recurring invoices. A term of two to three weeks creates urgency without feeling impossible to meet.
- Do not offer net 15 to a large buyer whose payables department pays on a fixed cycle. They will pay on their own schedule either way, and a term you do not enforce teaches your staff that past due means nothing.
- A service charge or interest on a net 15 account has to be in the written credit agreement the customer signed. Put the term, the start of the clock and the consequence of paying late on the credit application before the first order ships.
- Enforce net 15 with dated steps: a call in the first week past due, a credit hold when a promised date is missed, one final demand, and placement with a commercial collection agency at 90 to 120 days past due.
What's inside
What do net 15 payment terms mean?
Net 15 means the customer owes the full invoice amount within 15 calendar days of the invoice date. No discount is implied and no grace period follows. If you want the clock to start on delivery, on receipt of the invoice or at the end of the month, your written credit terms have to say so.
The word net means the whole amount, with nothing taken off. The number is how many days the customer has to pay it. An invoice dated the 1st on net 15 terms is due on the 16th and is past due the morning after. By convention the days are calendar days and they run from the date printed on the invoice, which is why the day you actually send the invoice matters. An invoice dated the 1st and emailed on the 6th has quietly become net 10, and your customer's payables clerk will count from the day it arrived no matter what the paper says.
Net 15 sits between the cash end of the scale and the open account end. Cash in advance, cash on delivery and due on receipt ask for payment at or before the handoff. Net 30 gives the customer 30 days and net 45 gives 45, and our guide to business payment terms covers how to choose among the longer ones. Net 15 is the shortest term that is still real trade credit. You have shipped, you have not been paid, and you are trusting the customer for two weeks.
When should you offer net 15 instead of net 30?
Offer net 15 when the account has not yet earned longer terms or when your own cash cycle cannot carry 30 days: a new customer, an account moving up from cash on delivery, a customer whose payments have begun to slip, or small invoices that recur often. Review the term once the account has a payment record.
The best use of net 15 is as a step. In the credit guide we give our clients, we describe starting a doubtful account on cash or cash on delivery for about six months, moving it to limited credit terms for the next six, and granting full terms after a year of clean payments. Net 15 is the natural middle step. The customer gets real credit, you see how they pay within weeks instead of months, and at any moment you have about half as many days of shipments riding on the account as you would at net 30.
It suits four kinds of account. The first is a new customer whose references are thin, or whose file leaves you undecided after you have worked through the five Cs of credit. The second is a customer who has started paying net 30 invoices at 45 and 50 days, where shortening the term in writing is a fair response to the record. The third is a customer who orders small amounts often, where a short term keeps the balance from stacking three or four invoices deep. The fourth is any account at all when your own bills come due faster than 30 days and you cannot afford to be the bank.
There is also a plain behavioral reason it works. A due date a month away reads to a busy payables desk as "I've got time," and the invoice goes to the bottom of the pile, under the ones due this week. The credit guide we publish for clients makes the case that terms between 14 and 21 days draw about the right amount of urgency. Two weeks is not next month, and it is not already late. The customer can meet it and knows it.
One caution about going shorter still. Some creditors prefer due on receipt, and we have always advised care with it. It may not be competitive with what the customer's other suppliers offer, and a term nobody can literally meet tends to be ignored. Net 15 gets you most of the speed.
When is net 15 the wrong term to offer?
Net 15 is the wrong term when the customer cannot physically pay that fast, when every competitor offers 30 days and the account is worth winning, or when you have no intention of following up on day 16. A short term that is never enforced does more harm than a longer one that is.
The clearest case is the large buyer. A company with a payables department, an approval chain and a check run every week or every two weeks is going to pay you on its cycle. Your invoice has to be received, matched to a purchase order and a receiving report, approved and scheduled, and in many companies that takes longer than fifteen days when nothing at all goes wrong. Put net 15 on that account and one of two things happens. They negotiate you up to 30 or 45 before the first order, which is fine. Or they sign whatever is on your form, pay on day 35 the way they pay everyone, and every invoice you ever send them shows as past due.
That second outcome does real damage, and the damage is to you. Your aging report fills with late invoices from your best customer. Your collector learns to skip past that name. Before long the whole past due column is noise, and the account that is truly in trouble hides inside it. I would rather see a creditor give a strong customer net 30 and mean it than give them net 15 and shrug.
Net 15 is also wrong when it costs you a sale for no reason. If every supplier in your trade sells on 30 days, a creditworthy buyer will read 15 as distrust. Terms are part of your price.
And it is wrong when nobody on your staff is going to act on it. The term only shortens your cash cycle if someone looks at the aging on day 16. If the first reminder goes out at day 45 whatever the terms say, what you have is net 45 with extra paperwork.
What has to be in writing before net 15 means anything?
Three things, signed by the customer before the first order ships: the term itself, the event that starts the 15 days, and what happens when payment is late. Any service charge or interest on a net 15 account has to be in that written credit agreement. Print the same term and the due date on every invoice.
A term printed only on the invoice is your statement of what you would like. A term on a signed credit application is something the customer agreed to. The difference shows up months later, when an account is in dispute and someone has to prove what the deal was. In our experience the files that collect fastest are the ones with a signed application, and the ones that drag are the ones where the only evidence of the terms is the creditor's own invoice template. An account can still be collected on the paper trail, as our piece on collecting a past due invoice without a signed contract explains, but on narrower terms.
So the credit application should state net 15 in words, say that the days run from the invoice date, and name who at the customer is authorized to buy on the account. We tell clients to talk the terms through when the account is opened, and to bring the same document back out when payments begin to slip. It works better as a reminder of an agreement than as a surprise.
Late charges need particular care. If your invoices are due upon receipt, some states' statutes allow a service charge with nothing in writing, and you should verify that state's statute before you bill one. Once you extend credit terms such as net 15 or net 30, any service charge or interest has to be in the written credit agreement the customer signed. If you have a signed agreement that allows for collection costs or collection agency fees, those charges may be included in the amount sought during collection. Laws vary by state, so have your counsel read the language once and then use it on every account. This is how we explain it to clients and it is not legal advice.
If your applications are still paper forms that a sales rep fills in when someone remembers, fix that first. An automated credit application gets the terms signed and the checks run before the order is released, which is the one moment you have the customer's full attention. Our guide on how to extend business credit covers the rest of the policy around it.
How do you enforce net 15 once an invoice is late?
Act in the first week. Call the person who releases payment between day 16 and day 22 and get a date. Confirm it in writing. Hold new orders the first time a promised date is missed. Send one final demand with a placement date. Short terms only pay off when the follow up is just as short.
Net 15 changes your calendar more than it changes the customer's. On net 30 terms, many companies make their first serious contact around day 45. On net 15 that same contact belongs at about day 20, when the invoice is five days late, the order is fresh in everyone's mind and the person who approved it still remembers doing so. A call that early is closer to a service call: did the invoice arrive, is anything wrong, when will it be paid. Our guide to accounts receivable collection calls has the script, and the collection email templates give you the written follow up for each stage.
The second tool is the one short terms were made for. Customers on net 15 are usually customers who order often, which means the next order is your leverage. The oldest version of this is what the trade calls bill-to-bill terms: the last delivery is paid for before the next one leaves the dock. You do not have to go that far, but the principle holds. When a promised payment date passes, the account goes on credit hold, the buyer and the payables contact are both told in writing, and the notice says exactly what releases it.
After that the sequence is the same as on any account, only earlier. One final demand letter with a date in it, and then the date is kept. My colleague Sven Nelson laid out the full order of steps in what to do when a business will not pay its invoice. The only adjustment for net 15 is that you count every step from a due date that arrived two weeks sooner.
One measure tells you whether this is working. Compare the days sales outstanding on your net 15 accounts with the term itself. If accounts on 15 day terms are averaging 40 days to pay, you do not have net 15 accounts. You have one term on paper and another in practice, and the customer knows which one is real.
Does an early payment discount make net 15 work better?
Sometimes, for customers who were going to pay anyway. Terms such as 1/10 net 15 give a small discount for payment within ten days, with the full amount due at fifteen. Discounts pull cash forward from good payers. They do not reduce delinquency from customers who are short of money or unwilling to pay.
You will see net 15 paired with a discount, written something like 1/10 net 15: a small reduction if the customer pays within ten days, the full balance due on the fifteenth. The gap between the discount date and the due date is only five days, so the customer has a reason to pay early and little room to drift.
Our experience, and what we have told credit managers for years, is that discount terms do speed up cash from customers who were already going to pay. They have not reduced delinquencies from the problem accounts. A customer who is short of cash cannot take a discount, and a customer who has decided to stretch you is not moved by one. So treat a discount as a pricing decision about your good accounts. It costs margin on every invoice it touches, including the ones that would have been paid on time without it. I would not add one in the hope that it fixes a slow payer.
When should a past due net 15 account go to a collection agency?
At 90 to 120 days past due, on the date your final demand named, the same as any commercial account. Because the invoice came due on day 16, that point arrives two weeks earlier on the calendar than it would on net 30. Place it with the signed terms, the invoices and your contact notes.
Short terms do one more useful thing that rarely gets mentioned: they start the clock sooner. The age of an account has more to do with whether it is recovered than anything an agency does, and age is counted from the due date. A net 15 invoice that you work properly reaches the point of decision while the order is still recent, the buyer is still in the job and the paperwork is still easy to find. I wrote about why that matters in how long commercial debt collection takes.
Our ideal placement is under 120 days past due. Most of the accounts that reach us are closer to 180, and nothing at the agency explains what is lost in those two months. The debtor pays the suppliers who pressed, people move on, and a complaint nobody raised in the first month grows into a dispute. Run net 15 the way this article describes and you will know well before then whether the customer intends to pay, with the file to prove the debt.
When that day comes, commercial debt collection by a licensed third party changes the customer's priorities quickly, and on business accounts it usually does so without ending the relationship. We take commercial accounts from $1,000 to hundreds of thousands of dollars, under 120 days past due, and we work on contingency: no recovery, no fee. We do not collect consumer or retail debt. How to place an account with a commercial collection agency lists what to send.
If your terms are fine and nobody has the hours to follow up on day 16, that is a staffing problem. First-party accounts receivable outsourcing makes those early contacts under your company's name, on schedule.
C2C Resources has collected commercial accounts in all 50 states since 2002, about 25,000 claims a year, from our offices in Atlanta, Georgia and Metairie, Louisiana. We are certified by the Commercial Law League of America, endorsed by the International Association of Commercial Collectors, carry a $500,000 surety bond and hold collection licenses in the states that require them.
Are your terms being paid, or only printed?
Send us your aging and the credit application your customers sign. We will tell you which accounts are past the point where reminders work, and whether your terms are written in a way that can be enforced.
Frequently asked questions
Is net 15 counted in calendar days or business days?
By convention net 15 means 15 calendar days from the invoice date, weekends and holidays included. If you want business days, or a rule for due dates that land on a weekend, write it into your credit terms. Whichever you choose, print the actual due date on the invoice so nobody at the customer has to count.
What is the difference between net 15 and due on receipt?
Due on receipt asks for payment as soon as the invoice arrives and extends no credit period. Net 15 gives the customer 15 days and is a true credit term. The distinction matters for late charges: on credit terms such as net 15, a service charge or interest has to be in the written credit agreement the customer signed. Laws vary by state, so check before you bill one.
Can I move an existing customer from net 30 to net 15?
Yes. Terms should follow the customer's payment record. Give notice in writing, tie the change to how the account has actually paid, say when it takes effect and say what would restore the longer term. Customers who value the account generally accept a fair, clearly explained change. Apply the same rule to every account so it reads as policy and not as punishment.
What does 1/10 net 15 mean?
It is net 15 with an early payment discount attached. The customer may take a small discount, the first number, by paying within ten days, the second number. Otherwise the full amount is due in fifteen days. It speeds up payment from customers who already pay well and does little for the ones who do not.
What should I do when a net 15 invoice goes unpaid?
Call the person who releases payment within a week of the due date and get a date. Confirm it in writing, and hold new orders if that date is missed. Send one final demand with a placement date in it, then place the account with a commercial collection agency at 90 to 120 days past due, with the signed terms and your contact notes in the file.