Invoice Payment Terms Explained: Net 30, Net 15, and More
In this guide
What Are Invoice Payment Terms?
Payment terms are the conditions you set on an invoice that tell the client when and how to pay. They typically include the deadline for payment, accepted payment methods, and any penalties for late payment or discounts for early payment.
Getting your payment terms right matters. Vague or missing terms are one of the most common causes of late payment — the client simply does not know when you expect to be paid.
Always agree payment terms with a new client before starting work. Putting them on the invoice alone is not enough — they should also appear in your contract or proposal.
Common Payment Terms Explained
Here are the payment terms you will encounter most often:
| Term | Meaning | Best For |
|---|---|---|
| Due on Receipt | Payment is due immediately upon receiving the invoice | Small jobs, new clients, retail |
| Net 7 | Payment due within 7 days | Short projects, ongoing retainers |
| Net 14 | Payment due within 14 days | Freelancers, small businesses |
| Net 30 | Payment due within 30 days | B2B transactions, the industry standard |
| Net 60 | Payment due within 60 days | Large enterprises, government contracts |
| Net 90 | Payment due within 90 days | Manufacturing, supply chain agreements |
| 2/10 Net 30 | 2% discount if paid within 10 days; otherwise due in 30 | Wholesale, incentivising early payment |
| EOM | Payment due at end of the month the invoice is received | Monthly billing cycles |
| COD | Cash on delivery — paid when goods arrive | Physical goods, new accounts |
How to Choose the Right Payment Terms
The payment terms you set should balance two things: keeping your cash flow healthy and being reasonable for your client. Consider these factors:
Industry norms
Some industries have standard terms. Construction and manufacturing commonly use Net 60 or Net 90 because of long project timelines. Professional services and freelancing typically use Net 14 or Net 30.
Client size
Large companies often have internal payment processing that takes 30+ days regardless of your terms. Small businesses and individuals can usually pay faster. Adjust your terms to the reality of how your client operates.
Cash flow needs
If you rely on invoice payments to cover monthly expenses, shorter terms (Net 7, Net 14) give you more predictable income. If you have a financial buffer, offering Net 30 can make you more attractive to clients.
Relationship history
For new clients with no payment track record, consider using shorter terms or requiring a deposit upfront. For long-standing clients who always pay on time, standard terms are fine.
Best Practice
For projects over a certain value, consider requiring a deposit (25–50%) before work begins and invoicing the remainder on completion. This reduces your financial risk on large engagements.
How to Write Payment Terms on an Invoice
Payment terms should appear clearly on your invoice — not buried in small print. Include the following:
- The due date — state the exact date, not just "Net 30". For example: "Payment due by 23 April 2026"
- Accepted payment methods — bank transfer, card payment, PayPal, etc.
- Bank details — account name, sort code and account number (UK), routing number (US), BSB (AU), or IBAN (EU)
- Late payment terms — what happens if payment is overdue (e.g. interest charges, service suspension)
Writing the actual due date (e.g. "Due by 23 April 2026") alongside the term (e.g. "Net 30") removes any ambiguity. The client does not have to calculate the date themselves.
Early Payment Discounts
Offering a small discount for early payment is a proven way to improve cash flow. The most common structure is:
- 2/10 Net 30 — 2% off if paid within 10 days
- 1/10 Net 30 — 1% off if paid within 10 days
- 5/10 Net 60 — 5% off if paid within 10 days on a 60-day term
Early payment discounts work best for higher-value invoices where the percentage saving is meaningful to the client.
Late Payment Penalties
If a client misses the due date, you have the right to charge interest in most jurisdictions. Here is a quick overview:
- UK — The Late Payment of Commercial Debts Act allows 8% above the Bank of England base rate, plus a fixed compensation amount (£40–£100 depending on the debt size)
- US — Late payment interest varies by state; typically 1–1.5% per month is standard in commercial contracts
- Australia — No statutory late payment interest for B2B, but you can set your own rate in the contract
Best Practice
Always state your late payment policy on the invoice itself. A clause like "Interest of 1.5% per month applies to balances overdue by more than 14 days" is clear and enforceable.
Generate an Invoice With Payment Terms
Our free invoice generator lets you set payment terms, due dates, and bank details — so your invoices are clear and professional every time.
Set your terms, add your bank details, and generate a PDF invoice in minutes.
Create an invoice with payment termsFrequently Asked Questions
What does Net 30 mean on an invoice?
Net 30 means the full payment is due within 30 calendar days from the invoice date. It is the most common payment term used in business-to-business transactions.
What is the most common invoice payment term?
Net 30 is the most widely used payment term across industries. However, freelancers and small businesses often prefer shorter terms like Net 14 or Due on Receipt to maintain cash flow.
Can I charge interest on late payments?
Yes, in most jurisdictions you can charge interest on overdue invoices, provided you state this on the invoice. In the UK, the Late Payment of Commercial Debts Act allows you to charge 8% above the Bank of England base rate. In the US, terms vary by state.
What does 2/10 Net 30 mean?
2/10 Net 30 means the client gets a 2% discount if they pay within 10 days; otherwise, the full amount is due within 30 days. It is an early payment incentive commonly used in wholesale and manufacturing.
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