In practice
In contract staffing the firm often pays the consultant before the client pays the firm, so longer terms put pressure on cash.
Terms are agreed in the vendor agreement or purchase order and can differ across clients.
How it shows up
Net 45 means the invoice is due 45 days after its date, while the consultant may expect weekly or bi-weekly pay.
How a staffing team uses it
Include payment terms in your cash planning and in your rate decision, since a long-term client can cost more to carry than a short-term one.
Common mistakes
- Ignoring terms when quoting a low margin.
- Not checking whether the end client or the vendor controls the schedule.
- Promising consultants faster pay than your own cash allows.
Frequently asked questions
Why do payment terms matter to small agencies?
The agency funds payroll before it is paid. Longer terms need more working capital.