Invoice payment terms, explained
"Net 30" is not jargon for its own sake — payment terms are the deadline you attach to an invoice, and choosing them well is one of the few levers a small business has over its own cash flow. Here is what the common terms mean and which to use.
What "payment terms" actually means
Payment terms are the conditions under which you expect to be paid — most importantly, by when. They turn an invoice from a vague "please pay me" into a dated obligation. The term goes on the invoice itself, and the due date is calculated from the invoice date.
The common terms, translated
| Term | Means |
|---|---|
| Due on receipt | Pay as soon as the invoice arrives. Best for one-off jobs and new clients. |
| Net 7 | Pay within 7 days of the invoice date. |
| Net 14 | Within 14 days. A sensible freelancer default — short, but gives a payment run time. |
| Net 15 / Net 30 / Net 60 | Within 15, 30 or 60 days. Net 30+ favors big buyers; the longer the term, the longer you wait. |
| 2/10 Net 30 | Pay in full within 30 days, or take a 2% discount if you pay within 10. An incentive to pay early. |
| EOM | Due at the end of the month the invoice was issued. |
| CIA / deposit | Cash in advance, or a deposit (often 50%) before work starts. Standard for larger projects. |
How to choose your terms
The instinct to offer "Net 30 because that looks professional" quietly costs freelancers a month of cash flow. A few rules of thumb:
- Shorter is better for you. Net 30 is a norm invented by large companies that benefit from holding cash. As a small operator, Net 7 or Net 14 is entirely reasonable and gets money to you sooner.
- New client? Take a deposit. A 50% deposit or "due on receipt" protects you from doing work for someone whose payment habits you have not seen yet.
- Bigger job, split it. Deposit, milestone, balance. It caps your exposure to any single unpaid invoice.
- Match the client's reality. Some large firms genuinely cannot pay faster than Net 30 because of their AP cycle. Price that delay in rather than fight it.
Set the due date, do not just imply it. "Net 14" is clearer with the actual date next to it: "Net 14 — due August 5, 2026." A calendar date removes any argument about when the clock started.
Late fees and early-payment discounts
You can encourage on-time payment from both directions. A late-payment fee — commonly 1.5% per month on the overdue balance — is a standard deterrent; state it in your terms so it is pre-agreed rather than a surprise. An early-payment discount (the "2/10" above) does the opposite, rewarding clients who pay quickly. Whether interest on late invoices is enforceable, and at what rate, depends on where you operate and what your contract says.
Let the tool do the date math
Counting 14 days forward by hand is exactly the kind of small task that introduces errors. In Billotter you pick a term — Due on receipt, Net 7, 14, 15, 30 or 60 — and the due date fills in automatically from the invoice date. Change the invoice date and the due date moves with it; type a due date manually and it switches to "Custom." One less thing to get wrong.
Frequently asked
What does Net 30 mean on an invoice?
Net 30 means the full invoice amount is due within 30 days of the invoice date. Net 15 and Net 7 work the same way with shorter windows. The 'net' refers to the full amount, as opposed to a discounted early-payment figure.
What are the best payment terms for a freelancer?
Shorter terms favor you. Net 7 or Net 14 is a reasonable default for freelancers, often paired with a deposit for new clients or larger projects. Net 30 mainly benefits large buyers who like holding cash — you do not have to offer it by default.
Does 'due on receipt' mean pay immediately?
Effectively yes — it asks the client to pay as soon as they receive the invoice, with no grace period. It is well suited to one-off jobs, small amounts, and clients you have not worked with before.
Can I charge a late fee on an overdue invoice?
Often, yes — a common figure is 1.5% per month on the outstanding balance, stated in your invoice terms so it is agreed in advance. Enforceability and maximum rates vary by jurisdiction and your contract, so check your local rules.
Keep reading
- How to write an invoiceThe 8 parts, step by step, with an example
- How to get clients to pay on timeDeposits, clear terms, and a follow-up script
- Invoice vs estimate vs quote vs receiptFour documents people mix up, sorted out
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