Net 30, Net 15, Due on Receipt — Payment Terms Explained
Payment terms on an invoice tell your client when and how to pay. They seem simple, but choosing the wrong terms — or leaving them vague — is one of the most common reasons freelancers and small businesses wait longer than necessary to get paid.
What Are Payment Terms?
Payment terms are the agreed-upon conditions under which a client will pay an invoice. They specify the payment deadline, any early payment incentives, and late payment penalties. The terms are usually stated in the invoice's "Terms" or "Payment Terms" field.
The most important thing to understand: payment terms start from the invoice date, not the date the client receives the invoice. If you invoice on January 1 and the client doesn't open their email until January 10, Net 30 still means February 1.
Common Payment Terms Decoded
The most common payment term in B2B invoicing. Gives clients a full month to process payment through their accounts payable system. Standard for consultants, agencies, and professional services.
Common for freelancers and smaller projects. Strikes a balance between giving the client time to process and getting paid quickly. Works well when you have an established relationship with the client.
Used for small, quick-turnaround jobs or when cash flow is tight. Some clients will push back on Net 7 if their AP department runs on a weekly or bi-weekly cycle.
Technically means "pay now," though in practice clients still take a few days. Best used for small, one-off transactions or with clients who have a history of paying promptly. Not realistic for large enterprise clients.
Common in manufacturing, construction, and large enterprise contracts. As a freelancer or small business, try to negotiate these down — Net 60 means you're essentially giving your client a two-month interest-free loan.
Common in product-based businesses where goods are delivered physically. Rarely used in service-based freelancing.
Which Terms Should You Use?
- Freelancers and solo consultants: Net 15 or Net 30. Start with Net 30 for new clients and negotiate down as the relationship develops.
- Agencies and studios: Net 30 is the industry standard. For project deposits, require payment before work begins.
- Product sellers: Due on Receipt or Net 7 for small orders; Net 30 for wholesale/B2B.
- Enterprise clients: Expect Net 30 to Net 60. Their AP systems often can't process faster regardless of your terms.
Early Payment Discounts (2/10 Net 30)
You'll sometimes see terms like 2/10 Net 30 on invoices. This means: "Pay within 10 days and get a 2% discount; otherwise, the full amount is due within 30 days."
Early payment discounts incentivize clients to pay faster and can improve your cash flow — but they cost you money. A 2% discount for paying 20 days early works out to an annualized rate of about 36%. Only offer this if cash flow is genuinely tight.
Late Fees — How to Set and Enforce Them
A late fee policy is one of the most effective tools for getting paid on time — not because you'll enforce it every time, but because its presence changes client behavior.
Standard Late Fee Rates
- 1.5% per month — the most common rate, equivalent to 18% annually
- 2% per month — more aggressive, appropriate if you've had chronic late payers
- Flat fee — some freelancers use a flat $25–$50 late fee per invoice
How to State It on Your Invoice
Put it plainly in the terms field: "Invoices unpaid after 30 days are subject to a 1.5% monthly service charge on the outstanding balance."
Enforcement Tips
- Always warn before adding a late fee — send a reminder email first
- You don't have to enforce it every time; use it as a negotiation tool
- Check your local laws — some jurisdictions cap late fee rates
- If a client is habitually late, require deposits or upfront payment going forward