What is Net 30 and how can it help with business credit?

Business owners attempting to build business credit should take the time to learn what the term Net 30 means and how it can affect their PAYDEX score (or business credit score). Lets begin by defining the word Net in the term Net 30. In this context the word Net refers to the net amount of money which is owed. The number 30 refers to the amount of days which may elapse before net amount must be paid. So having a Net 30 account with a vendor basicly means that the vendor will allow you to purchase items on credit but these items must be paid for in full withing 30 days of the purchase date.

A late fee will usually be added to the amount owed if full payment is not received within the agreed upon 30 day period. Late payments will also have a negative affect on your business credit score since vendors are required by law to report late payments to the major credit bureaus. Making your payment in full earlier than the expected 30 days might positively affect your business credit score but it also might not affect your score at all. Knowing when to make an early payment can give a business owner the edge needed to build business credit faster.