Invoice payment terms explained

Payment terms answer one question — by when — and most disputes about them are really disputes about when the clock started. The terms below are conventions, not law, which is why writing the actual due date beside them matters more than picking the right abbreviation.

The terms you will actually meet

  1. Due on receipt

    Payment is expected immediately. 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 is a financing decision you are making on their behalf.

  3. EOM

    Due at the end of the month the invoice was issued in. Useful when a client runs one payment run a month, because it puts every invoice on the same clock.

  4. 2/10 Net 30

    Two per cent off if paid within ten days, otherwise the full amount at thirty. It is an expensive discount for you and a cheap return for them, so offer it only where cash timing 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, and a few will read it as thirty days from when they approved it. Print the due date itself and none of those readings matter.

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, write that, because nobody will assume it.
Can I change terms on an existing client?
Yes, forward. Announce the change before the work it applies to, and apply it from a stated date; changing the terms on an invoice for work already done is a dispute you will lose.
Do shorter terms actually get paid faster?
Often, but not below the client's payment run. If they pay twice a month, Net 15 and due on receipt land on the same day, and only the second one makes you look unfamiliar with how they work.

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