Invoice payment terms explained

Payment terms answer one question: by when? Most disputes about them are really about when the clock started. The terms below are conventions, not law. So writing the actual due date next to them matters more than picking the right abbreviation.

The terms you will actually meet

  1. Due on receipt

    You expect payment straight away. That is realistic for small amounts and for consumers. In a company with a payment run it usually means "the next run", so expect two to four weeks in practice.

  2. Net 15, Net 30, Net 60

    Payment is due that many days after the invoice date. Net 30 is the default in most of the United States. Net 60 is common with large buyers, and it means you are financing them.

  3. EOM

    Due at the end of the month the invoice was issued in. This works well when a client pays once a month, because every invoice is then on the same clock.

  4. 2/10 Net 30

    Two per cent off if paid within ten days, otherwise the full amount at thirty. The discount costs you a lot and gives them an easy return. Offer it only when getting the cash sooner is worth more than the margin.

Say when the clock starts

"Net 30" means thirty days from the invoice date. Half of your clients will read it as thirty days from when the invoice reached them. A few will read it as thirty days from when they approved it. Print the due date itself and none of that matters.

Which to choose

  • New client, small job: due on receipt, or a deposit and the balance on delivery
  • Established client, regular work: Net 15 or Net 30, matched to their payment run
  • Large buyer with fixed terms: their terms, priced accordingly
  • Long project: staged payments tied to milestones rather than one term at the end

Put terms on an invoice

Common questions

Is Net 30 thirty calendar days or business days?
Calendar days, by convention. If you mean business days, say so, because nobody will assume it.
Can I change terms on an existing client?
Yes, going forward. Announce the change before the work it applies to, and apply it from a stated date. If you change the terms on an invoice for work already done, you will lose that dispute.
Do shorter terms actually get paid faster?
Often, but not faster than the client's payment run. If they pay twice a month, Net 15 and due on receipt land on the same day. The second one only makes it look like you don't know how they work.

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