Glossary
What is a credit period?
What a credit period is, how it sets the due date on every invoice, and the 45-day rule 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
Lakshmi Steel Furnitures gives Ravi Stores 30 days and Sri Murugan Traders 15 days. On 20 October 2026 the two September invoices look like this:
| Invoice | Customer | Date | Terms | Due | On 20 Oct |
|---|---|---|---|---|---|
| INV-2026-27-0015 | Ravi Stores | 18 Sep | Net 30 | 18 Oct | 2 days overdue |
| INV-2026-27-0018 | Sri Murugan Traders | 25 Sep | Net 15 | 10 Oct | 10 days overdue |
How long can a credit period be with an MSME supplier?
Under section 15 of the MSMED Act, a buyer must pay a micro or small enterprise supplier within the agreed period, which cannot be more than 45 days from accepting the goods or services. With no written agreement, the limit is 15 days. Late payment carries interest, and under section 43B(h) of the Income Tax Act the expense is allowed only in the year it is paid.
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.
Related
Keep reading
Credit limit
The most a seller lets one customer owe at any time, checked before each new sale on credit.
Read moreAgeing report
Unpaid invoices or bills grouped by how long they are past due.
Read morePayments & receivables
Receipts and payments allocated oldest first, receivables and payables ageing, and statements.
Read more
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