What Does "20th of the Month Following" Mean?
"20th of the month following" is a payment term used on New Zealand invoices to mean the invoice is due on the 20th day of the month after the one the invoice was issued in, not 20 days after the invoice date itself.
What "20th of the Month Following" Means
Under this term, the due date is not counted from the invoice date. Instead, the invoice is due on the 20th of the calendar month after the month it was issued in, regardless of which day within that month the invoice was raised.
This is common on New Zealand trade accounts and supplier invoices, particularly in wholesale, trade and manufacturing sectors. The exact wording in the contract or account terms always controls the actual due date, so it is worth checking the specific agreement rather than assuming.
Three Simple Examples
The same "20th of the month following" term produces very different waiting periods depending on when in the month the invoice is issued.
| Invoice Date | Due Date | Approximate Wait |
|---|---|---|
| 1 August | 20 September | About 50 days |
| 15 August | 20 September | About 36 days |
| 31 August | 20 September | About 20 days |
An invoice raised on the first of the month waits the longest to be paid. An invoice raised near the end of the month reaches the same due date much sooner.
Why New Zealand Businesses Use This Term
Fixing the due date to a specific day of the following month gives both sides a predictable rhythm: the customer knows exactly when payments are due each month, and the supplier can plan around a known date rather than a different due date for every invoice.
It also lines up naturally with monthly account statements, where a customer's purchases for the whole month are expected to be settled together on one date.
How It Affects Supplier Cash Flow
Because the wait depends on the invoice date within the month, a supplier's cash flow under this term is uneven. Invoices raised early in the month sit unpaid for close to 50 days, while invoices raised late in the month are settled much sooner. Across a full month of trading, this can leave a supplier carrying a significant, shifting balance of unpaid invoices at any given time.
How It Differs From Net 30
Net 30 is generally calculated from the invoice date itself: an invoice issued on 1 August under Net 30 is due around 31 August, and an invoice issued on 15 August is due around 14 September. Each invoice gets roughly the same length of time to be paid.
"20th of the month following" is tied to the calendar month, not the invoice date, so the actual number of days can range from around 20 to around 50 depending on when in the month the invoice was raised. As always, the agreed contractual wording controls what actually applies, and this is not legal advice: check the specific terms on your own invoices or contracts.
Benefits and Drawbacks
For the customer, this term is straightforward to plan around: one due date each month, regardless of how many invoices were raised. For the supplier, it can mean a long and uneven wait for payment, particularly on invoices issued early in the month, and it leaves the supplier carrying that receivable for the entire period.
Alternatives Suppliers Can Consider
Suppliers who find the wait under this term difficult to manage have a few options: tightening the term itself, requiring part-payment upfront, or offering customers a business instalment option through PaidTerms Capital instead of a trade account, where the supplier is paid upfront rather than waiting for a fixed calendar date.
How PaidTerms Capital Fits
Rather than waiting until the 20th of the month following, a supplier using PaidTerms Capital is paid the full invoice amount upfront once an eligible customer is approved. The customer then repays PaidTerms over an agreed schedule, instead of settling one lump sum on a fixed calendar date. See how business instalment payments work in New Zealand for the full process.
Frequently Asked Questions
Is "20th of the month following" the same for every invoice?
No. The due date depends on when in the month the invoice was raised, so the actual number of days before payment can range from around 20 to around 50 days.
Does this term apply automatically?
No. It only applies if it is the agreed term in your contract or account terms. Always check the specific wording that applies to your invoices.
Offer Customers Flexibility While Getting Paid Upfront
See how PaidTerms Capital lets NZ suppliers get paid upfront instead of waiting on a fixed calendar due date.
Read next: trade accounts vs business instalments, or how payment terms affect the cash conversion cycle.
