Payment terms are the deal you set on every invoice: how long the client has to pay, and what happens if they do not. Get them right and you get paid faster with fewer awkward follow-ups. This guide explains the common terms, what Net 30 really means, how to choose terms that fit the job, and how to work out the exact due date.
What are invoice payment terms?
Invoice payment terms are the conditions for payment that you state on the invoice. At a minimum they say when payment is due, counted from the invoice date. Clear terms set expectations up front, so the client knows the deadline and you know when to follow up. Terms that live only in your head, or that change from invoice to invoice, are the fastest way to slow, unpredictable payment.
Common payment terms
- Due on receipt. Payment is expected as soon as the client gets the invoice. Best for small jobs, new clients, and one-off work.
- Net 15, Net 30, Net 60, Net 90. Payment is due that many days after the invoice date. Net 30 is the most common default.
- EOM (end of month). Payment is due on the last day of the invoice month. Some suppliers use end of next month to give a little longer.
- Custom terms. Any number of days you agree with the client, such as Net 21 or Net 45.
What does Net 30 mean?
Net 30 means the full invoice amount is due 30 days after the invoice date. The word net refers to the total owed, and the number is the days the client has to pay. So an invoice dated the 1st with Net 30 terms is due on the 31st. Net 15, Net 45, Net 60, and Net 90 work the same way with a different number of days. These are calendar days, not business days, unless you state otherwise on the invoice.
How to choose payment terms
Shorter terms get you paid sooner, so use due on receipt or Net 15 where you can, and save Net 60 or Net 90 for larger clients who require them. Match the term to the risk: a trusted repeat client can have longer terms than a brand-new one. Consider a small early-payment discount to speed things up, and set a late fee so overdue invoices carry a real consequence. Whatever you decide, put it in writing on the invoice and in the agreement.
Calculate the exact due date
Counting days across months of different lengths is easy to get wrong. Our free invoice due date calculator does it for you: enter the invoice date, pick the terms, and it shows the exact due date and how many days away it is, including end-of-month terms and leap years.
What to do when payment is late
When an invoice slips past its due date, follow up promptly and apply the late fee you set in your terms. Our free late fee calculator works out the fee and the total owed, so your reminder has a clear number in it. A polite, firm follow-up on day one of being overdue is far more effective than waiting weeks.
Put terms on every invoice
The simplest way to keep terms consistent is to build them into the invoice itself. Our free invoice generator lets you set the date, terms, and due date on a professional invoice you can download and send. With Billbooks you can also send automatic reminders and collect payment online, so clear terms turn into faster payment.