Today our A/P clerk came into my office with a letter from one of our suppliers.Â The letter basically tells us that our credit terms are Net 30 days, and that our May 31 invoice is overdue.
Upon emailing the vendor to point out that it is only 25 days since the date of the invoice and let them know that the cheque is already awaiting signature,Â our A/P clerkÂ gets a response back that tells her the following:
- Our terms are Net 30 days
- They take all invoices for the month and they are due on the 15th of the following month
It actually says in the email that they average out the days for the month.Â Since there are 15 days before the mid-point of the month, and 15 days after, they expect payment on the 15th of the following month, which is 30 days after the average of days from the current month.
How’s that for logic?Â Last time I checked, when you mark an invoice with terms of Net 30 days, you are giving the purchaser 30 days from the invoice date to pay it.Â It is treated on an invoice by invoice basis.Â I think we’re going to point out to this lady that the terms that she is envisioning is actually Net 15th Month Following, which is a generally accepted term in business.
We were both floored by the letter.Â We’ve used this vendor for years, and even use them as a credit reference.Â We do a significant amount of business with them, and cut cheques weekly for all invoices received at our offices.Â Granted, there are sometimes delays, but overall they usually have payment for every invoice within 2 weeks of it being issued.
The conculsion that we came to is that we will offer to adhere to Net 30 day terms as generally accepted in business, (and marked on every invoice we receive from them,) or we can use an alternate vendor for the last two weeks of every month.