Invoice Payment Terms Explained: Net 30, Net 15, Due on Receipt
Payment terms are the handful of words on your invoice that decide whether you get paid in two weeks or two months. Yet most small businesses copy whatever terms they've seen elsewhere without understanding what they mean — or what they're giving up. This guide explains every common term in plain English, helps you choose the right ones for your situation, and gives you exact wording to put on your invoices.
What the common terms actually mean
- Net 30 — full payment due 30 days after the invoice date. The default in most B2B industries. Invoice on October 3, payment due November 2.
- Net 15 — payment due 15 days after the invoice date. Common for project work, freelancers, and smaller businesses that can't finance a month of receivables.
- Net 60 / Net 90 — 60 or 90 days. You'll see these from large corporations and government-adjacent clients. They are effectively asking you for an interest-free loan — price accordingly or push back.
- Due on receipt — payment expected immediately upon receiving the invoice. Perfectly professional for small amounts, first-time clients, and one-off jobs. In practice, expect a few days.
- 2/10 Net 30 — a 2% discount if paid within 10 days, otherwise the full amount is due in 30 days. An early-payment incentive (more on the math below).
- EOM (End of Month) — payment due at the end of the month in which the invoice was issued. "Net 30 EOM" on an October 12 invoice means due November 30.
- COD (Cash on Delivery) / CIA (Cash in Advance) — payment at or before delivery. Standard for new or high-risk customer relationships.
Which terms should you choose?
There's no universally correct answer, but there are wrong ones for your situation. Use this framework:
- New clients or small amounts (under ~$1,000): Due on receipt, or 50% upfront for project work. You have no payment history with them — don't extend credit on day one.
- Established clients who pay reliably: Net 15 or Net 30. Match what the relationship has earned.
- Large projects: milestone payments (e.g., 30/40/30) rather than one big Net 30 invoice at the end. See our contractor invoicing guide for the full structure.
- Clients who demand Net 60/90: either decline, add a premium for the financing cost, or require partial payment upfront. A 90-day term on thin margins can quietly kill a small business.
The golden rule: shorter terms are always better for your cash flow, and most clients accept whatever you put in front of them if it's stated confidently before work begins. Terms introduced for the first time on the invoice itself are far harder to enforce — agree them in the contract or proposal first.
How to write payment terms on the invoice
Don't just stamp "Net 30" in a corner and hope. Spell it out in plain language in the terms section:
- Net 15: "Payment due within 15 days of the invoice date (due October 18, 2026)."
- Net 30: "Payment due within 30 days of the invoice date (due November 2, 2026)."
- Due on receipt: "Payment due upon receipt of this invoice."
- With late fee: "Payment due within 15 days. Balances more than 30 days overdue are subject to a 1.5% monthly late fee."
- With deposit: "50% deposit ($1,200) due before work begins; balance due within 15 days of delivery."
Always print the actual calendar due date next to the term. "Net 30" requires the reader to do math; "due November 2, 2026" doesn't.
Do early-payment discounts actually work?
Sometimes — but do the math first. A "2/10 Net 30" discount means giving up 2% to get paid 20 days early. Annualized, that's an expensive trade: 2% for 20 days works out to roughly a 36% annual rate. You're effectively borrowing from yourself at credit-card interest.
That said, discounts make sense when:
- You have a genuine cash crunch and need money in the door this month.
- The client is large, slow-paying, and the discount is the only lever that moves them.
- The invoice is large enough that 2% is meaningful to the client but bearable for you.
For most freelancers and small businesses, a clear due date plus a late-fee clause outperforms discounts. It costs you nothing and, paradoxically, the threat of the fee does most of the work.
Late fees belong in your terms from day one
A late-fee clause is the highest-ROI sentence you'll ever put on an invoice. Something like "a 1.5% monthly late fee applies to balances overdue by more than 30 days" — stated upfront, in writing, before the work starts. You may rarely enforce it, but invoices carrying the clause get paid measurably faster than identical ones without it. Our guide on how to charge late fees covers amounts, wording, and how to actually apply them.
Payment terms FAQ
Is Net 30 the same as "due in 30 days"?
Yes — "Net 30" is just the traditional commercial shorthand for payment due 30 days after the invoice date.
Can I change my payment terms for existing clients?
Yes, with notice. Announce it before the next project ("starting next quarter we're moving to Net 15"), not as a surprise on an invoice for work already agreed.
What if the client just ignores my terms?
Then you have a collections problem, not a terms problem — see our guide on what to do when a client doesn't pay. Good terms documented in writing are what make every later step possible.
Should payment terms differ for international clients?
Often yes — cross-border transfers take longer, so build in buffer. See how to invoice international clients for currency and payment-method guidance.