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Glossary

What is a credit period?

What a credit period is, how it sets the due date on every invoice, and the legal limits some countries set when you buy from a small supplier.

Updated

In short

A credit period is the number of days a customer has to pay after the invoice date, which sets the due date. SimpleERP stores it as payment terms on each customer and supplier and fills the due date.

A credit period is the number of days a seller allows a customer to pay after the invoice date, such as 30 days. The due date is the invoice date plus the credit period. It is also called credit days or payment terms, written as Net 30. An invoice unpaid after its due date is overdue, which is what an ageing report measures.

Credit period: a worked example

Harbour Steel Furniture gives Riverside Stores 30 days and Oakfield Traders 15 days. On 20 October 2026 the two September invoices look like this:

InvoiceCustomerDateTermsDueOn 20 Oct
INV-2026-0015Riverside Stores18 SepNet 3018 Oct2 days overdue
INV-2026-0018Oakfield Traders25 SepNet 1510 Oct10 days overdue
Both sit in the 1 to 30 days bucket of the ageing report.

In some countries, yes. Several set a maximum payment period for business purchases, or give small suppliers a right to interest when they are paid late, so a long credit period you ask a supplier for may not hold. Check the rules where you trade.

In India, a buyer must pay a registered micro or small supplier within the agreed period, at most 45 days, or within 15 days without a written agreement: see the MSME 45-day payment rule (India).

FAQ

Questions, answered

What does Net 30 mean?

Net 30 means the full invoice amount is due 30 days after the invoice date. An invoice dated 1 October on Net 30 is due on 31 October. Net 7, Net 15 and Net 60 work the same way.

What credit period should I give customers?

Match what your own suppliers give you, so you are not paying for stock before customers pay you. Many trading and manufacturing businesses use 15 to 45 days. Give longer terms only to customers who pay on time, and review them against the ageing report.

What is the difference between a credit period and a credit limit?

The credit period limits how long a customer can take to pay. The credit limit limits how much they can owe at once. A customer can be within the limit and still overdue, so track both.

Can I change the due date on one invoice?

Yes. In SimpleERP the due date is filled from the customer's payment terms and can be edited on the invoice before it is posted, as long as it is not earlier than the invoice date.

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