Invoice Payment Terms Explained: Net 30, Due on Receipt & More

What Are Invoice Payment Terms?

Payment terms are the conditions under which you expect to be paid for goods or services. They specify when payment is due, any early payment discounts, and late payment penalties. Including clear payment terms on every invoice reduces disputes and speeds up collections.

Common Payment Terms Explained

Due on Receipt

Payment is expected immediately upon receiving the invoice. Best for one-time clients, small jobs, or when you don't have an established relationship with the client.

Net 15 / Net 30 / Net 60

"Net 30" means payment is due 30 days from the invoice date. Net 15 is tighter (15 days), while Net 60 gives the client 60 days. Net 30 is the most common standard in B2B invoicing. For small freelance projects, Net 15 or Due on Receipt is more appropriate.

2/10 Net 30

This means the client gets a 2% discount if they pay within 10 days; otherwise the full amount is due in 30 days. It's a way to incentivise early payment.

End of Month (EOM)

Payment is due at the end of the month in which the invoice was issued. Some businesses use "Net 30 EOM" — 30 days after the end of the invoice month.

Advance Payment / Upfront

You require full or partial payment before starting work. Common in creative industries, custom manufacturing, or with new clients.

Which Payment Terms Should You Use?

• Freelancers: Due on Receipt or Net 15 — you're doing small jobs and need cash flow
• New clients: Ask for a 50% deposit upfront
• Established B2B: Net 30 is the standard expectation
• Slow-paying clients: Add a late payment fee clause (e.g., 1.5% per month)

Late Payment Fees

Always include late payment terms on your invoice. Something like: "Invoices unpaid after 30 days are subject to a 1.5% monthly late fee." This is legal in most countries and encourages timely payment.