Invoice payment terms tell your customer when and how to pay. The most common are due on receipt, Net 7, Net 14 and Net 30, which mean payment is due straight away or within that many days of the invoice date. Agree your terms before the work starts, print them on every invoice with the exact due date, and keep them short enough that your cash flow doesn't suffer.
Your payment terms decide when the money lands in your account. Not the date you finish the work, and not the date you send the invoice. In my experience working with small businesses, late payment usually starts with vague terms rather than a bad client. Nobody agreed a date, so the invoice drifts to the bottom of someone's pile.
Clear terms do three jobs. They set expectations before you start, they give you something to point to when you chase, and they put you on firmer ground if a debt ever turns into a dispute. Below you'll find what each common term means, wording you can copy, a quick note on the law in the UK and US, and a simple way to pick your own.
Common payment terms explained
| Term | What it means | When to use it |
|---|---|---|
| Due on receipt | Payment is expected as soon as the customer gets the invoice. | One-off jobs, new customers and small invoices. |
| Net 7 | Payment is due within 7 days of the invoice date. | Freelancers and small jobs where you want money moving quickly. |
| Net 14 | Payment is due within 14 days of the invoice date. | A common middle ground for small businesses and regular clients. |
| Net 30 | Payment is due within 30 days of the invoice date. | Larger clients and companies with set monthly payment runs. |
| Net 60 | Payment is due within 60 days of the invoice date. | Only when a big client insists and you can comfortably wait. |
| EOM | End of month. Payment is due at the end of the month the invoice is dated, or a set number of days after it, such as Net 30 EOM. | Clients who pay all their suppliers in one monthly batch. |
| 2/10 net 30 | The customer gets a small early-payment discount if they pay within 10 days. Otherwise the full amount is due within 30 days. | When getting paid early is worth more to you than the discount. |
| PIA | Payment in advance. The customer pays before you start the work or send the goods. | Custom orders, brand new clients and anything you can't take back. |
| 50 percent upfront | Half is paid before work starts and the rest on completion. | Projects, design work and anything with a long lead time. |
Whatever you choose, write the actual due date on the invoice as well as the term. 'Net 14' means something to you. 'Due by 21 November' means something to everyone, including the person in accounts who's never heard of you.
Wording you can copy
Keep it short and specific. These four lines cover most situations, and you can paste them straight into your invoice template:
- "Payment is due within 14 days of the invoice date. Please pay by bank transfer using the details below."
- "Payment is due on receipt. Thank you for your business."
- "Terms: Net 30. Please quote the invoice number as your payment reference."
- "A 50 percent deposit is due before work begins, with the balance due within 7 days of completion."
Next to your terms, add your bank details, the invoice number, what the invoice is for and a named contact for questions. Every missing detail is one more reason for someone to put it aside. Most invoicing tools, including FreshBooks, Xero, QuickBooks, Zoho Invoice and Wave, let you save default terms so they appear on every invoice automatically. If you're still choosing one, I've compared the main invoicing software for freelancers and small businesses.
UK and US: what the law says about late payment
In the UK
The Late Payment of Commercial Debts (Interest) Act lets businesses claim statutory interest and a fixed compensation sum when another business pays an invoice late. It covers business-to-business sales, not sales to consumers. If you haven't agreed a payment date, the law generally treats payment as due 30 days after the customer receives the invoice or the goods or services, whichever is later.
You don't have to claim it. Many small businesses use the right as a quiet reminder rather than a threat, and a line on your invoice saying you reserve the right to claim statutory interest often does the job on its own.
In the US
There's no federal equivalent for business-to-business invoices. Whether you can charge interest or a late fee comes down to what's in your contract and your state's law, and some states limit what you can charge. Put any late payment terms in writing and get them agreed before the work starts.
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This is general information, not legal advice. If a large debt is at stake, check with a solicitor, an attorney or your accountant before you act. For the practical side of chasing, my guide on how to prevent late payments walks through what to do before and after the due date.
How to choose your terms
- Work out how long you can wait. Look at your own bills and ask how many days you can cover before a client pays.
- Check what's normal in your field. If every supplier in your industry works to Net 30, Net 7 might put off bigger clients, but you can always ask.
- Ask for a deposit on bigger jobs. Upfront payment protects your time and filters out clients who were never going to pay promptly.
- Agree terms in writing before you start, in your quote, proposal or contract, not for the first time on the invoice.
- Print the term and the exact due date on every invoice.
- Automate your reminders so chasing doesn't depend on you remembering. These invoice reminder tools send polite nudges before and after the due date.
- Review your terms once a year. If you're chasing the same clients every month, shorten the term or ask for payment upfront.
Shorter isn't always better. A big client may only pay on their own monthly cycle, whatever your invoice says. In that case, find out their payment run dates and time your invoices to land just before them.
Frequently asked questions
What does Net 30 mean on an invoice?
Net 30 means the full amount is due within 30 days of the invoice date. Write the exact due date on the invoice too, so there's no confusion.
What are the most common invoice payment terms?
Due on receipt, Net 7, Net 14 and Net 30 are the most common. Small businesses often use 7 or 14 days, while larger companies tend to work to 30 days or more.
Can I charge interest on a late invoice?
In the UK, businesses can usually claim statutory interest and fixed compensation on late business-to-business invoices. In the US it depends on your contract and state law, so check with an adviser first.
Should I ask for payment upfront?
For custom work, new clients and long projects, a deposit or payment in advance is common and reasonable. Agree it in writing before you start.
