Invoice payment terms explained
Payment terms state when an invoice must be paid. Net 30 means payment is due 30 days from the invoice date, Net 15 within 15 days, and due on receipt means immediately. Shorter terms with a specific due date get paid faster than long or vague ones, and terms you never stated are terms you cannot enforce.
The common terms, translated
| Term | Means | Typical use |
|---|---|---|
| Due on receipt | Pay immediately | Small jobs, new clients, deposits |
| Net 7 | Within 7 days of the invoice date | Freelancers with good client relationships |
| Net 15 | Within 15 days | A good default for small business |
| Net 30 | Within 30 days | Standard for corporate clients |
| Net 60 / 90 | Within 60 / 90 days | Large enterprise and retail; expect to be asked |
| 2/10 Net 30 | 2% discount if paid within 10 days, otherwise due in 30 | Encouraging early payment |
Shorter terms genuinely work
Most invoices are paid close to their due date rather than as soon as they arrive, because they enter a payment run scheduled around that date. Moving from Net 30 to Net 15 therefore tends to move the actual payment date, not just the nominal one. If you have never asked, ask — it is a rare client who negotiates back.
Make the terms enforceable
- State the terms on the invoice itself, not only in the contract.
- Put a specific due date on the document — a date is unambiguous in a way “Net 30” is not.
- If you charge late fees, disclose the rate on the invoice. Undisclosed penalties are difficult to apply.
- Keep terms consistent across invoices to the same client, or you invite argument about which applied.
Early-payment discounts
A 2% discount for paying within 10 days is a real cost — roughly 36% annualised against Net 30 — so use it only if cash flow genuinely justifies it. For most small businesses, shortening the terms and following up promptly is cheaper than discounting.
Frequently asked questions
Does Net 30 mean 30 days from the invoice date or from delivery?
From the invoice date, unless your contract says otherwise. This is why sending the invoice promptly matters — the clock does not start when you finish the work.
Can I charge interest on a late invoice?
Often yes, and some jurisdictions grant a statutory right to interest on late commercial payments. But state the rate on the invoice up front; enforcing an undisclosed charge is much harder.