meaning of "within x days due date net"

Dear all,

I'm trying to get a round of opinion (plus also any expert opinion that I can) on a wording issue to do with payment terms.

A client who already demands 60 days payment terms (instead of our usual 30) is only paying the invoices on the next convenient pay-run after the 60 days are up. Their official wording is "within 60 days due date net". Now to me, that means within 60 days of the date of the invoice. But as the client only does payruns twice a month, payment is usually around the 75 days mark.

When I have queried this, I have been advised that our invoices are not being paid late because:

You should also have been advised by n, (or on your copy of your PO), that your payment terms are ‘within 60 days due net’ which means that you will be paid in the payment run following the 60 days. (xxx Corporate Policy is 75 days payment terms). This is very common for businesses as we would be unable to pay every invoice as soon as it became due. We do not have any issues with any of our other suppliers regarding our payment terms, due to it being common practice.

Am I wrong in thinking that they are bang out of order? I am particularly troubled by the implication that we are alone in seeing a problem with this interpretation of payment terms.

I should add that this is a large multinational corporation (obviously no names named) that uses SAP for their payment and invoicing.

All thoughts appreciated.

Al

In my opinion.

1. A 60 day payment term appears to be the agreed payment period, if this is written on their PO, then you will be deemed as accepting the order on these terms. If it is not on their PO and you have no written contract, then your terms should apply.

2.Therefore Payment becomes due 60 days after receipt of invoice or delivery of goods, whichever is later.

3. To use the term payment on next payment run after 60 days, then they should put this on their PO to make this the term. It could be seen as an unfair contract term.

4. If there is a dispute on payment terms, this can default to 30 days. Perhaps in your case it would be fairly seen as 60 days, as this is what appears to have been agreed, if this is what is on the PO.

Thanks for your reply.

I'm not sure I completely understand you, though.

Although I dislike 60 days as payment terms, I can't argue with that - we accepted those terms. So points 1 and 4, while valuable, probably don't apply in my case.

But under point 2, where you say "payment becomes due 60 days after receipt" - does that mean that they must have paid within the 60 days, or that they can pay when it suits them after those 60 days? This is what they are disputing, and what I'm looking for a consensus on. (I could probably have been clearer!)

If I understand your third point correctly, your opinion is that "payment on the next pay run after 60 days" is different from "payment within 60 days due date net". Is that correct?