While Net 90 offers extended time for payment, it also introduces potential risks:
1. Delayed Payments: The longer payment period increases the risk of delayed or missed payments, which can strain a company's finances.
2. Credit Risk: Extending Net 90 terms to clients involves assessing their creditworthiness. Default risk is an inherent challenge, and companies must perform due diligence before offering such terms.
3. Interest and Penalties: If a company relies on borrowed funds to manage cash flow while waiting for payments, interest costs can accrue, affecting profitability.
