Credit terms are the conditions under which a seller lets a buyer pay after delivery instead of upfront. They spell out the payment window (for example, Net 30, meaning payment is due 30 days from the invoice date), any discount for paying early, and the interest or fees that apply if payment is late. Sellers usually extend credit terms only after running a credit check on the buyer.
How they work
A typical set of credit terms is written as a short code. “Net 30” means the full balance is due 30 days after invoicing. “2/10 Net 30” adds an early-payment discount: the buyer can take 2 percent off if they pay within 10 days, otherwise the full amount is due at 30 days. Terms also state late penalties, such as a 1.5 percent monthly finance charge on overdue balances, and often a credit limit that caps how much a buyer can owe at once.
Why it matters
Trade credit is how most wholesale and B2B commerce runs. Buyers expect it because it lets them receive goods, sell or use them, and pay from the proceeds. For sellers, offering terms can win larger orders and repeat business, but it ties up cash and adds collection risk, which is why the credit check and credit limit matter.
In B2B quoting on Shopify
Credit terms belong on the quote itself, so the buyer knows the deal before they accept. A quote might read “Net 30, 2/10 discount, subject to approved credit.” When a request becomes a real order, terms flow into the invoice and the payment method you allow. Deciding upfront which customers get terms and which pay at checkout keeps the process clean. See the B2B quoting glossary for related terms like Net terms and purchase order.