Among all the commonly used payment terms Net 47 Weekly might seem a little unusual – after all, 47 is a prime number, so it’s not like you’re giving customers a certain number of calendar weeks or working weeks to make payment.
So what are the advantages of making your payment terms Net 47 Weekly as standard? Well the ‘weekly’ part means accounts should generally be settled at the end of each week, instead of at the end of the month – allowing you to invoice more frequently, and keeping a steady stream of payments incoming.
It might make more sense to imagine invoicing everybody on a Monday for the work done in the previous week; this gives them five days to pay within the week, followed by a further 42 days, or six calendar weeks, to settle their invoice before the deadline.
This is a little longer than invoicing monthly on Net 30 terms, but remember you will be invoicing every week, rather than potentially waiting up to 31 days between delivering the work and being able to charge for it on monthly terms.
Overall, this should hopefully mean the vast majority of payments come in faster than they otherwise would, or at least more regularly once the client’s own invoicing processes fall into step with your terms.
Net 47 Weekly payment terms are used (perhaps most famously) by GM Motors, including the Chevrolet Europe brand, since the automotive group went through a period of financial difficulty during the recession.
Back in 2009, GM Motors – which had adopted Net 60 payment terms at a time when their finances were performing particularly poorly – announced a switch to Net 47 Weekly, promising weekly disbursements on an average of 47 days to pay.
It should be noted that GM Motors used these terms as a buyer, rather than a supplier – the Net 60 payment terms forced their own suppliers to wait longer for payment, with money coming in the first week of a new calendar month as standard.
So the switch to Net 47 Weekly payment terms was welcomed for the same reasons outlined above, more regular payments and faster payment overall.
If you are in an industry where large account balances can accumulate within a matter of days, or simply in a situation where you cannot trust customers to pay 60 days from the date of invoicing, Net 47 Weekly could be a good compromise – not as strict as Net 30, but with the benefit of more frequent billing for your own cash flow.