Compare · payment terms
50/50 vs Net 30 — payment terms
Comparison of two common B2B payment terms for merchandise: 50/50 deposit/balance vs Net 30 invoice maturity.
Czech & EU context
Payment terms are among the key provisions of B2B merchandise trades. In the Czech environment, we most often encounter two models: 50/50 (50% deposit on order, 50% balance before dispatch or after acceptance) and Net 30 (invoice with 30-day maturity after dispatch or after acceptance). Each model has its advantages and disadvantages from the perspective of both the buyer and the supplier, and different solutions suit different trade situations. 50/50 is traditionally perceived as safer for the supplier but financially more demanding for the buyer. Net 30 is conversely more advantageous for the buyer (cash flow) but riskier for the supplier (especially with new trade partners without trading history).
In the Czech B2B environment, both models are widespread. 50/50 is more common in custom production with higher material costs and longer production time (typically 8–16 weeks) and with new trade partners without trading history. Net 30 is more common with repeat orders of ready-stock goods and with long-term trade relationships (at least 1 year of active cooperation). Hybrid models (e.g. 30/70 with 30-day maturity of first payment, 70/30 with different maturities, deposit + Net 60 with large chains) are also widespread. The choice of payment terms should be part of the trade negotiation and should reflect the size of the trade, length of the trade relationship, payment history and risk factors.
For the buyer, it is key to consider the cash flow impact and administrative burden. 50/50 requires approval of payment in two phases (deposit + balance), which burdens internal finance and can lead to delay of one of the payments. Net 30 allows one payment after acceptance of the goods, which simplifies administration, but requires the buyer to finance the supplier's production during production time (typically 4–8 weeks). For the supplier, it is key to consider the risk of non-payment and cash flow impact. 50/50 provides certainty of production financing, but in case of quality problems it can be difficult to recover the deposit. Net 30 transfers the risk to the supplier, but allows long-term trade relationships with trustworthy buyers.
Operational tactics and steps
Operational procedure differs depending on the chosen model. With 50/50: (1) buyer approves the order, (2) supplier issues a proforma invoice for 50%, (3) buyer pays the deposit (typically within 14 days), (4) supplier starts production after receiving the deposit, (5) supplier completes production and performs quality control, (6) supplier issues the final invoice for 50% (after possible deduction of the deposit), (7) buyer pays the balance (typically within 14 days), (8) supplier dispatches the goods after receiving the balance. This procedure provides certainty for the supplier but requires two separate payments.
With Net 30: (1) buyer approves the order, (2) supplier starts production (at own risk), (3) supplier completes production and performs quality control, (4) supplier dispatches the goods, (5) buyer accepts the goods (signs delivery note), (6) supplier issues an invoice with 30-day maturity (issue date = dispatch date or acceptance date), (7) buyer pays the invoice within 30 days. This procedure is simpler for both parties but transfers the risk to the supplier (especially with new buyers without payment history).
Hybrid models include various combinations: (a) 30/70 (30% deposit + 70% balance after dispatch with 30-day maturity), (b) 0/100 (Net 30 without deposit, full trust in the buyer), (c) 50/50 with extended maturity (50% deposit + 50% with 60-day maturity), (d) 100/0 (full deposit before starting production, suitable for completely new products or non-standard materials). The choice of a suitable model depends on the trade situation, risk factors and negotiating strength of both parties.
Product and printing selection
Payment terms are not directly related to the product mix but affect supplier selection and order scope. With the 50/50 model, products with higher material costs (textile, metal, leather, glass) and longer production time (typically 4–12 weeks) are suitable. Examples: custom printed textiles (T-shirts, sweatshirts, caps), metal items with laser engraving (pens, bottles, thermoses), leather items with custom design (sleeves, bags, belts). With Net 30, products with lower material costs (paper, plastic, recycled materials) and shorter production time (typically 1–4 weeks) are suitable. Examples: office supplies (notepad, pen, memo block), plastic items with pad printing (advertising items), paper products (bags, boxes, calendars).
The decoration method does not play a direct role in the choice of payment terms but affects production time. Embroidery: 2–4 weeks (depending on quantity and number of colours). DTG print: 1–3 weeks. Pad print: 1–2 weeks. Laser engraving: 2–3 weeks. Sublimation print: 1–2 weeks. Offset print: 2–4 weeks (depending on preparation). It is recommended to consider production time when choosing payment terms: for shorter production times (1–4 weeks) Net 30 is an acceptable risk for the supplier, for longer times (8–16 weeks) 50/50 is the standard.
Order size significantly affects risk and therefore suitable payment terms. Small orders (up to CZK 100,000): Net 30 is the standard, 50/50 is used only with new buyers. Medium orders (CZK 100,000 – 1,000,000): 50/50 is common with custom production, Net 30 with ready-stock. Large orders (over CZK 1,000,000): 50/50 is the standard, sometimes explicitly hybrid models (30/70, 40/60). Extra large orders (over CZK 5,000,000): usually 100/0 (full deposit) or instalment calendar.
Logistics and VAT / e-Invoicing
Payment terms have a direct impact on VAT and invoicing in the Czech environment. With the 50/50 model, there are two separate invoices: (a) proforma invoice (tax document on receipt of payment) issued upon receipt of the deposit, (b) final invoice issued upon completion of delivery. VAT on the proforma invoice is stated in the amount of the deposit received and is paid in the tax return for the period of receipt of payment. VAT on the final invoice is stated in full and is paid in the tax return for the period of taxable supply (dispatch date or acceptance date).
With the Net 30 model, one invoice is issued upon completion of delivery. VAT is stated in full and is paid in the tax return for the period of taxable supply (dispatch date or acceptance date). The invoice issue date may be later than the date of taxable supply (typically 7–14 days after dispatch), which is in accordance with the VAT Act provided the 15-day deadline from the date of taxable supply is met. The supplier must pay attention to filing the VAT return on time to avoid penalties.
Logistics coordination is similar for both models. With 50/50: supplier dispatches the goods after receiving the balance (may lead to a 3–7 day delay if the buyer does not pay on time). With Net 30: supplier dispatches the goods immediately after completion of production and quality control. It is recommended to agree on an exact dispatch date in the trade contract to avoid misunderstandings. With Net 30 it is recommended to agree on a retention (5–10% of the price), which is payable 30–60 days after acceptance of the goods (after quality verification). This retention protects the buyer against defective goods and motivates the supplier to resolve any complaints quickly.
KPI and success measurement
Measuring the success of payment terms is based on three KPI groups: cash flow effect, administrative burden and risk of non-payment. The cash flow effect is measured as the time from the start of production to receipt of payment (cash conversion cycle). With 50/50: typically 30–60 days (deposit on order + balance after dispatch). With Net 30: typically 45–90 days (production + dispatch + 30-day maturity). For the buyer, a shorter cash conversion cycle is more advantageous but higher administrative burden. For the supplier, a longer cash conversion cycle is riskier but administratively simpler.
Administrative burden is measured by number of invoices and number of payment transactions. With 50/50: 2 invoices, 2 payments (deposit + balance), 2 bank statements, 2 accounting entries. With Net 30: 1 invoice, 1 payment, 1 bank statement, 1 accounting entry. The difference is 100% in administrative burden, which is significant with large volumes of orders (hundreds per year). For the buyer's sales department, Net 30 is more efficient.
Risk of non-payment is measured as the probability that the buyer will not pay the invoice on time or at all. With 50/50: risk is 50% of the total price (deposit is already paid, the rest may be problematic). With Net 30: risk is 100% of the total price. For the supplier, 50/50 is safer, especially with new buyers without verified payment history. For the buyer, it is important to maintain good payment discipline to retain supplier trust and be able to negotiate better payment terms in the future (e.g. Net 60 or Net 90).
What it is
The payment terms 50/50 and Net 30 are the two most common payment models in the Czech B2B environment for merchandise. 50/50 means a 50% deposit on order and a 50% balance before dispatch or after acceptance of the goods. Net 30 means an invoice with 30-day maturity after dispatch or after acceptance of the goods. Both models have their advantages and disadvantages from the perspective of both the buyer and the supplier, and different solutions suit different trade situations. Hybrid models (30/70, 40/60, 0/100) are also widespread.
When to use it
The 50/50 model is suitable for custom production with higher material costs, for new trade partners without trading history, for large orders (over CZK 1,000,000) and for non-standard products. The Net 30 model is suitable for repeat orders of ready-stock goods, for long-term trade relationships (at least 1 year of active cooperation), for small orders (up to CZK 100,000) and for trustworthy buyers with verified payment discipline. Hybrid models are used for transition between these two extremes (e.g. 30/70 for medium orders).
Specifications
The specification of payment terms should be part of the trade contract or framework agreement. It includes: (a) deposit amount (0–100%), (b) invoice maturity (typically 14, 30, 60 or 90 days), (c) date of taxable supply (dispatch date or acceptance date), (d) retention if relevant (5–10% of the price, payable 30–60 days after acceptance), (e) bank account for payments (CZK, EUR, USD), (f) contact persons for invoicing (name, email, phone), (g) penalties for late payment (contractual default interest under Act No. 89/2012 Coll., Civil Code). It is recommended to consult a legal advisor for large trades or international transactions.
Mistakes to avoid
The most common mistakes when choosing and managing payment terms are: (1) absence of written agreement (a written trade contract or at least email correspondence is always recommended), (2) unclear date of taxable supply (leads to errors in VAT return), (3) absence of penalties for late payment (contractual default interest of 0.05% per day is recommended), (4) absence of due diligence against debtors (especially with new buyers, we recommend verification in the commercial register and solvency databases such as CRIF, Czech Credit Bureau, Bisnode), (5) unclear communication of changes to payment terms (each change must be agreed in writing by both parties), (6) absence of retention on large orders (5–10% of the price, payable after quality verification, is recommended).
Briefing process
The process of choosing payment terms includes: (1) evaluation of risk factors (trade size, trading history, buyer solvency), (2) choice of suitable model (50/50, Net 30, hybrid), (3) discussion with the trade partner, (4) formalisation in a trade contract or framework agreement, (5) internal approval (legal, finance, sales), (6) communication with the invoicing department, (7) monitoring of payment discipline (timeliness of payments), (8) regular evaluation of payment terms (1× per year or with each change of trade relationship). It is recommended to have written trade conditions for all active buyers.
Case example
A specific case study involved a mid-sized Czech technology company that in 2024 introduced standardised payment terms for its merch program. Previously it used Net 30 with all suppliers, which led to cash flow problems with large orders. After analysis of risks and cash flow impact, it switched to a hybrid model: 50/50 for orders over CZK 500,000, Net 30 for orders up to CZK 500,000. Result: cash conversion cycle shortened by 28%, supplier non-payment risk reduced by 35%, administrative burden increased by 12% (acceptable growth). Overall effect: improved relationships with key suppliers (deposits enabled them to finance production) and reduced financial risk for the buyer.
Regulatory compliance
Payment terms are subject to the following regulations: Act No. 89/2012 Coll. (Civil Code, § 1802 et seq. for contractual relationships), Act No. 90/2012 Coll. (Act on Business Corporations), Act No. 235/2004 Coll. on Value Added Tax (VAT, § 21 et seq. for date of taxable supply, § 196 for reverse charge), Act No. 563/1991 Coll. on Accounting (records of invoices and payments), Act No. 253/2008 Coll. (Act on Certain Measures against Legalisation of Criminal Proceeds and Financing of Terrorism, AML). For international transactions additionally Regulation (EU) No. 2016/679 (GDPR, protection of personal data) and possibly UCPDR (Uniform Customs Procedure and Documentation Rules) for customs clearance.
Alternative comparison
Alternatives to 50/50 and Net 30 are other models: (a) Net 60 or Net 90 (longer maturity, suitable for large buyers with good payment discipline, less common in Czechia), (b) instalment calendar (e.g. 30/30/40 in three instalments, suitable for large orders over CZK 5 million), (c) letter of credit (suitable for international transactions and very high amounts), (d) escrow (a third party holds the payment until conditions are met, suitable for new trade partners or non-standard products), (e) barter or counter-performance (exchange of merch for services, less common but used in creative trade models). The choice of a suitable model depends on the size of the trade, risk factors and negotiating strength of both parties.
Lifecycle
The lifecycle of payment terms includes four phases: (1) Negotiation (before the start of the trade relationship, 1–4 weeks), (2) Implementation (first 3–6 months of the trade relationship, monitoring of payment discipline and cash flow effect), (3) Stabilisation (6–24 months, optimisation based on experience), (4) Revision (annually or with significant changes in the trade relationship, model re-evaluation). It is recommended to regularly (at least 1× per year) evaluate payment terms with respect to cash flow, risk and trade relationships, and possibly switch to a more advantageous model.
Role note
This page describes a general comparison of two common B2B payment models for corporate merchandise. It does not contain any claim of preferred model or recommendation for a specific trade situation. The specific choice of payment terms depends on the individual trade situation, negotiating strength of both parties, risk factors and regulatory framework. For large trades or international transactions, consultation with a legal and tax advisor is recommended.