The main risk of offering net terms is facing cash flow problems. For example, offering net 60 terms means it could take up to 60 days to convert revenue to cash. The average company expects payment in 27 days, but the average payment period is 34 days. Even a difference of a few days could lead to cash flow issues.
By offering net terms, your company may:
Experience a cash crunch
Be unable to meet financial commitments to suppliers and creditors
Spend more due to credit costs, which are the cost to borrow cash
Get paid past the due date
Not get paid