What are payment terms?

Payment terms are the agreed conditions that specify when, how, and under what conditions a buyer must pay a supplier for products or services. They are especially important in B2B eCommerce because businesses often use invoicing, credit, deposits, or negotiated payment arrangements instead of immediate payment.

Payment terms can specify:

• Payment deadline: For example, Net 30 or Net 60.
• Payment method: Bank transfer, card, payment gateway, or other agreed methods.
• Deposit requirements: A percentage may be payable before production or fulfillment.
• Installments: Large orders may be paid in multiple stages.
• Early-payment discounts: A supplier may offer a discount for paying early.
• Late-payment charges: Fees or interest may apply when payment is overdue.
• Credit limits: Customers may have a maximum outstanding balance.
• Currency: The currency in which payment must be made.

Example: A supplier may sell ₹5 lakh of equipment with 20% upfront and the remaining 80% due within 30 days of delivery.

Clearly defined payment terms help businesses manage cash flow, reduce payment disputes, plan receivables, and establish clear expectations between buyers and suppliers. The exact terms should be agreed upon in the contract or applicable sales documentation.