Jump to content
The Wifcon Forums and Blogs

Sign in to follow this  
Sap114

Questions Regarding Net-60 Payment Terms

Recommended Posts

My company is thinking of switching to standard Net-60 payment terms for most contracts without much knowledge of doing so other than increased cash flow. My question is, are Net-60 payment terms considered the norm in most government contracting sectors? Furthermore, how is this policy viewed within industries by suppliers, prime contractors, FAR Council, etc.. Has their been any legislation or policy guidance regarding longer payment terms?  

Share this post


Link to post
Share on other sites
20 minutes ago, ji20874 said:

Sap114,

What are you changing from?

Our current standard terms are Net-30

Share this post


Link to post
Share on other sites

Generally speaking, for your ACCOUNTS RECEIVABLE, if you propose the terms to those to whom you sell, changing from Net 30 to Net 60 will be detrimental to you, if your payers actually wait the full 60 days.

Generally speaking, for your ACCOUNTS PAYABLE, if you impose the terms to those who sell to you, changing from Net 30 to Net 60 will be beneficial to you, if you actually wait the full 60 days and if your suppliers don't raise their prices because of the payment terms.

For Government prime contracts, Net 30 days is seen as the default.  A contractor may offer discount terms, such as 1%-10, meaning that if the Government makes payment within ten days, it may take a 1% discount.  I have never seen Net 60.

Share this post


Link to post
Share on other sites

Sap, Please clarify. What kind of contracts are you referring to and are you talking about payments to subs and suppliers? 

Share this post


Link to post
Share on other sites

A couple of links that you might find helpful………for the first link go to the menu on the left had side and go to "Prompt Payment".  For the second link do a search of the document on "60" for discussion about the cost of money.

https://www.fiscal.treasury.gov/fsservices/gov/pmt/payments_home.htm

https://www.asaonline.com/eweb/tcc/TCCJan2015/tcc_2015_Jan.pdf

Share this post


Link to post
Share on other sites

SAP114,

If you are a government contractor, are your government customers paying you in 30 days? If not, why not?

If you look at your contracts, do any contain the clause 52.232-40?

Hope this helps.

Share this post


Link to post
Share on other sites

Create an account or sign in to comment

You need to be a member in order to leave a comment

Create an account

Sign up for a new account in our community. It's easy!

Register a new account

Sign in

Already have an account? Sign in here.

Sign In Now
Sign in to follow this  

×