Introduction

Understanding and managing repayment terms is crucial for a smooth B2B sales process. This guide explains how repayment terms (often called "net terms" or "payment due dates") are determined and can be influenced when you use Two for your business customer transactions. We'll cover how different Two features like standard invoicing, Billing Accounts, and instalment plans affect these terms.

Clear repayment terms ensure your buyers know when their payments are due, fostering trust and predictability.

Prerequisites

Before diving in, ensure you have:

  • Familiarity with Two's order creation process.
  • If you plan to use consolidated invoicing, an understanding of Billing Accounts.
  • If offering repayment plans (best suited for lease/rental/subscription type orders), familiarity with the Repay API

How Repayment Terms are Determined with Two

The due date for an invoice or statement is influenced by your commercial agreement with Two, the specific Two product you're using for a transaction, and any configurations you've set up. Here's a breakdown of the primary methods:

1. Standard Orders (Funded Invoices - Net Terms)

For typical orders where Two sends an invoice for each transaction (often referred to as "funded invoices" with net terms like Net 14, Net 30, etc.):

  • Fulfilment is Key: The repayment term clock starts once you fulfil the order using the POST /v1/order/<order_id> /fulfillments endpoint. Upon fulfilment, Two issue the invoice to the buyer.
  • Contractual Basis (Default Terms): Your commercial agreement with Two defines the default net terms available for your account (e.g., Net 30, Net 45). These terms usually have associated pricing fees, with shorter terms generally incurring lower fees.
  • Dynamic Net Terms via API (Order Level): You can override the default net terms for a specific order by providing the terms.duration_days field when creating an order with POST /v1/order. This allows you to offer flexible terms (e.g., 30, 45, 60, or 90 days) per transaction.

    Example: Setting duration_days for a standard order

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    // In your POST /v1/order request body:
"terms": {
    "type": "NET_TERMS",
    "duration_days": 30         // Buyer billed after specified number of days
}

Visual representation of net terms selection during order creation.

  • Display in E-commerce Plugins: If you use an e-commerce plugin (e.g., WooCommerce, Magento), the payment option displayed at checkout (like "Pay by Invoice - 30 days") should reflect the terms you offer.

2. Billing Accounts (Grouped Invoicing)

When using Billing Accounts to consolidate multiple orders onto a single statement:

  • Account-Level Configuration: Repayment terms are primarily defined at the billing account level using the duration_days parameter when creating or updating a billing account via the Billing Account API.
  • Statement-Based Terms: The duration_days (e.g., 30) for a billing account means the buyer has that many days to pay from the date the grouped statement is issued, not from individual order fulfilment dates.
  • Schedule Influence: The schedule (e.g., MONTHLY, WEEKLY) of the billing account dictates when the statement is generated. For instance, a MONTHLY schedule with duration_days: 30 effectively creates an "End of Month + 30 days" term from the statement date.

    Example: Setting duration_days for a Billing Account

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    // In your POST /billing/v1/account request body:
{
    "merchant_id": "YOUR_MERCHANT_ID",
    "merchant_customer_id": "BUYER_INTERNAL_ID_123",
    "schedule": "MONTHLY",
    "duration_days": 30, // Buyer has 30 days from statement date
    "generation_delay_days": 4,
    "primary_recipient": {
        "email": "accounts.payable@examplebuyer.com"
    },
    "account_name": "Example Buyer Monthly Account"
}

3. Instalment Orders (via Two Order API)

Two also supports instalment payments directly through the Order API. This feature allows you to split an order's cost over a defined number of payments and period.

  • Beta Feature: This is currently in beta and available to limited users. Please contact Two if you wish to use this.
  • terms Object: To set up an instalment order, you include the terms object in your POST /v1/order request.
  • Commercial Agreement: The available instalment structures (number of instalments, periods) are typically agreed upon in your commercial agreement with Two.
  • Exclusivity: The terms object for instalments cannot be used simultaneously with billing account terms.

    Example: Setting terms for an Order API instalment plan

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    // In your POST /v1/order request body:
"terms": {
    "number_of_instalments": 12, // Order split into 12 instalments
    "period": "MONTHLY",         // Buyer billed monthly
    "type": "INSTALMENTS"
}

4. Repayment Plans (via Repay API - for Lease/Subscription)

For lease or subscription-based business models, Two offers the Instalment API (Repay API). This is a distinct service from the main Order API.

  • Self-Contained Service: The Repay API manages the entire lifecycle of these repayment plans separately.
  • Plan-Defined Structure: The repayment structure (number of instalments, amounts, due dates) is defined when you create a repayment plan using this API.
  • Scheduled Payments: Buyers adhere to a schedule of individual instalment payments rather than a single net due date.

Order of Precedence for Term Settings

It's important to understand how Two prioritizes these settings if multiple are provided for a single order:

  1. Order API terms (Instalments): If a valid terms object (for Order API instalments) is included in a POST /v1/order request, it takes highest priority. This will define the order as an instalment order.
  2. Billing Account duration_days: If an order is associated with a billing_account_id and no Order API terms are set, the duration_days configured for that billing account will determine the repayment terms (based on the statement date).
  3. Order API terms.duration_days (Net Terms): If neither Order API terms nor a billing_account_id is present, but terms.duration_days is provided, this will set the net term for the individual funded invoice.
  4. Merchant Default Terms: If none of the above are specified in the API request, the default net terms defined in your commercial agreement with Two will apply to the funded invoice.

Essentially, for a given order, you choose one primary method to define its repayment structure.

Configuring and Displaying Repayment Terms to Buyers

  • Via Contract with Two: The most fundamental way terms are set is through your agreement with Two. These become the default or available options for your account.
  • Billing Account API: As shown above, use the duration_days field in the Billing Account API to set specific terms for buyers on grouped invoicing.
  • E-commerce Plugins:
    • Plugin settings often allow you to select which of your agreed-upon payment terms are presented to the buyer at checkout.
    • The descriptive text for the payment method (e.g., "Invoice - Pay in 14 days") should accurately reflect the term being applied.
  • Direct API (Order Level): For standard POST /v1/order requests, there isn't typically a field to dynamically set arbitrary net terms per order. The terms applied are based on your merchant agreement and the specific Two product configuration (e.g., if the order is linked to a billing account).

How Buyers See Repayment Terms

Consistency and clarity are key for a good buyer experience:

  • Checkout Display: The payment method description in your checkout should clearly state the repayment term (e.g., "30-day payment terms," "Net 14 days").
  • Order Confirmation: Reinforce the terms in order confirmation emails or pages.
  • Invoices: The due date is always clearly printed on the PDF invoice issued by Two.
  • Billing Statements: For buyers on billing accounts, the due date for the total statement amount is clearly indicated on the statement.
  • Instalment Schedules: For instalment plans, the buyer receives communication detailing each payment amount and its due date.

Key Considerations

  • Fulfilment Timing: For standard net-term invoices, the payment term usually starts once the order is marked as fulfilled and Two issue the invoice.
  • Billing Account Cycles: For billing accounts, the term starts from the statement generation date, which depends on the schedule and generation_delay_days.
  • Instalment Start: For instalment plans (both Order API and Repay API), the first payment due date and subsequent schedule are defined at the time of plan creation/confirmation.
  • Buyer Communication: Clearly communicate the applicable payment terms to your B2B customers before they complete a purchase.
  • Two's Credit Policy: All orders and associated payment terms are subject to Two's credit approval and risk assessment.
  • Plugin Limitations: While e-commerce plugins offer convenience, they don't allow payment term selection. Custom API integrations provide the most flexibility.

Conclusion

Repayment terms with Two are primarily governed by your merchant agreement, the Two services you utilize (Funded invoicing, Billing Accounts, Instalments), and configurations made via API or e-commerce plugins. By understanding these mechanisms, you can ensure a transparent and efficient payment process for your business customers.

For specific questions about the repayment terms available to your merchant account or for guidance on complex scenarios, please reach out to your Two account manager or our support team.