Invoice Payment Terms Explained: Net 15, Net 30 and More

What each common payment term means and how to pick the right one for your clients.

Payment terms are the part of an invoice that says when the client has to pay and under what conditions. They look like small print, but they decide how long your money stays in someone else's account. Choose them on purpose, agree on them before the work starts and write them clearly on every invoice.

The most common payment terms

• Due on receipt. Payment is expected as soon as the client gets the invoice. Common for small jobs, one-time customers and services finished on the spot, such as a repair, a cleaning or a pressure washing job.
• Net 7, net 10, net 15. Payment is due 7, 10 or 15 days after the invoice date. Short terms like these are common for freelancers and small service businesses working with individuals or small companies.
• Net 30. Payment is due 30 days after the invoice date. This is the standard many businesses use for supplier invoices, and some larger companies expect it, or even net 45, net 60 or longer.
• End of month (EOM). Payment is due at the end of the month in which the invoice was issued, or a set number of days after it, depending on how it's written.
• Payment in advance or upon delivery. The client pays before you start or when you hand over the work. Often used for products, files or one-time events.
• Deposit and balance. Part up front, the rest on completion. Typical for contractors, photographers, DJs, caterers and designers.
• Progress or milestone payments. The total is split across stages of the project, with an invoice for each, for example at start, at design approval and at launch.

What "net" means

"Net 30" means the full (net) amount is due within 30 days. The days are usually counted from the invoice date, which is one reason to send invoices the day the work is finished: an invoice dated today and sent next week has already lost a week. If you count from another date, like the delivery date, say so.

Early payment discounts

You may see terms like 2/10 net 30. That means the client can take a 2% discount if they pay within 10 days; otherwise the full amount is due in 30. It can speed up payment from businesses that watch their costs, but it's real money off your price, so use it only when getting paid sooner is worth it to you.

How to choose your terms

There isn't one right answer. A few things to weigh:

• Who the client is. Homeowners and individuals usually pay on completion or within a few days. Companies often have a payment schedule and may only pay supplier invoices on certain days, so ask about it before you agree to the work.
• How big the job is. The larger the amount, the more it makes sense to use a deposit or milestones instead of waiting until the end.
• Your costs. If you pay for materials, staff or subcontractors before you're paid, long terms mean you're financing the client. Shorter terms or a deposit protect your cash flow.
• What's normal in your trade. Clients compare. If everyone in your field asks for payment on completion, net 60 will look odd, and vice versa.

When in doubt, shorter is better for small businesses. Net 15 or net 14 tends to get paid faster than net 30, simply because the date comes sooner.

How to write payment terms on an invoice

Don't rely on abbreviations alone. Plenty of clients don't know what "net 15" means. Write it out:

• "Payment due within 15 days of the invoice date (by March 31)."
• "Payment due upon receipt."
• "Deposit received: $500. Balance of $1,450 due on completion."
• "Payment methods: bank transfer, card or check payable to [your business name]."
• "A late fee may apply to balances not paid by the due date, as stated in our agreement."

Putting the actual due date next to the term removes any doubt. In the invoice generator, you set the number of days and the due date appears on the PDF; the notes field holds the rest of your terms. Trade templates such as the web design invoice template or the catering invoice template come with terms that fit how those jobs are usually paid.

Agree on terms before the work, not on the invoice

The invoice should confirm terms the client already knows. Put them in your estimate, quote or contract, and repeat them on the invoice. A client who sees net 7 for the first time on the final bill is more likely to push back than one who agreed to it at the start.

Late fees

If you want to charge for late payment, it has to be part of what you agreed, and it has to follow the rules where you work: some states limit how much interest or what kind of late fee can be charged, so check your state's rules. Our guide on how to charge a late fee covers the details, and the late fee calculator works out the amount.

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