ELi5: why do companies have Net 30/60/90 terms?

Question

If when I purchase something I pay for it immediately why do companies/government/orgs after approving a transaction and/or receiving the work take 1-2months to pay for it?

EDIT: I am a new agency owner, so trying to figure out cash flow

EDIT 2: thank you guys so much for the detailed answers! Really helped me further narrow down the kinds of customers I do and don’t want to work with moving forward.

In: 2

Answer 1

From a construction pov, we are purchasing materials for the client. Net 60 allows us to bill the client so we can pay for the materials with funds from them. That way, we aren’t financing so much of their project.