Net Amount

What is net amount?

The net amount is the bottom line on an invoice—the actual total your client needs to pay. It's what's left after you start with the gross amount and apply any discounts, add taxes, or make other adjustments. This is the number that matters most when it comes to getting paid.

How net amount is calculated

The formula is straightforward:

• Start with gross amount — The sum of all line items
• Subtract discounts — Any percentage or flat discounts applied
• Add taxes — Sales tax, VAT, or other applicable taxes
• Apply credits — Any credit notes or adjustments
• Result: Net amount — The final total due

For example: $1,000 gross - $100 discount + $72 tax = $972 net amount.

Net vs. gross

Gross amount is your starting total before adjustments. Net amount is the final figure after everything is factored in. Your gross shows the full value of your work; your net shows what you're actually collecting. Both are important for understanding your business finances.

Net amount and payment terms

When you see terms like "Net 30," the "net" refers to this final amount. It means the net amount (total due) must be paid within 30 days. The payment terms apply to whatever the final calculated total is, after all discounts and taxes.