Invoice payment terms explained
Payment terms say when an invoice must be paid. Picking clear ones helps you get paid on time and avoids awkward conversations.
Common terms
- Due on receipt: payment is expected as soon as the invoice is received
- Net 7, net 14, net 15: payment is due that many days after the invoice date
- Net 30, net 45, net 60: common with larger companies, with longer waits
- Deposit up front: part of the price is paid before work begins
- Milestone billing: payments are tied to stages of a project
How to choose
Shorter terms get you paid sooner, but some clients cannot meet them. Larger companies often have a fixed payment cycle, so net 30 may be the norm. For new clients or large jobs, a deposit reduces your risk.
Late fees
You can charge a late fee only if you have told the customer in advance, usually on the invoice or in your agreement. Limits on late fees vary by place, so check local rules before adding one.
Say it on the invoice
Write the terms and the actual due date on the invoice, not only the term name. A date leaves no room for doubt.
Questions
What does net 30 mean?
Payment is due 30 days after the invoice date.
Should I offer an early payment discount?
Some businesses offer a small discount for paying early, such as 2% off if paid in 10 days. Work out whether the faster cash is worth the discount for you.
Free tool: Invoice Due Date Calculator
Free, no signup. Download as a PDF.
General information, not legal, tax, or accounting advice. Rules vary by place.