Hey Freelancer! Look At This Guide To Get Most From The Net Term

Freedom to choose your clients, work from home, better work-life balance and be your boss- freelancing has its perks.

According to the survey by up work’s seventh annual study entitled freelance forward, 2020 “amidst the coronavirus pandemic 59 million Americans performed freelancing in the past 12 months indicating the increase of 2 million freelancers since 2019”.

But of course, the freelance world that seems so fascinating from the outside has some downside too. Letting you wait for the payments – managing finance is one of the toughest jobs of being a freelancer. When you are still at the beginning, not getting paid for work is a quite uncomfortable situation that affects your existence in the market.

The job is done from your end. You invoiced the client on the Net 30 payment term basis, But still waiting for the payment after the due date is over? The nonpayment or late payments of invoices are a significant blow to every freelancer. So if you want to maintain the regular cash flow, then you must protect yourself smartly on every step of freelancing.

The first step we suggest is – consider adding Net term along with the invoices rather than sending them alone.

What is the Net term?

Ideally, the fundamental rule of the market is simple “do work and get paid”. But unfortunately, it only works for service businesses, like a salon, restaurant, or mechanic shop, where you pay instantly for their services. but for big businesses, things get more complex with the prevalence of cash flow problems. In such cases, your clients don’t immediately pay and ask for the grace period (say 30 days) to settle the bills.

This can be better understood with the example of a utility provider (say electricity bill or water supply bills) where you tend to pay for the services of a month in the next month. They provide you a grace period of a few weeks before the due date.

This approach of billing where freelancers or small businesses offer trade credit financing to their clients is called Net terms. Let’s take an example, Net 30 or Net 15 are trade credits where the total outstanding of the invoice should be paid in full during the tenure of 30 or 15 days respectively.

Typically you can see the following Net payments term in various invoices:

Net 30: payment due within the 30 days of invoice issue.

Net 45: payment due within the 45 days of invoice issued.

Net 90: payment due within the 90 days of invoice issued.

How does the Net term work for you?

When offering Net term, the first step for a freelancer is to determine the client credit limit and then decide the time frame accordingly. In most cases, the term extends to Net 30, Net 60, or Net 90 terms-giving business owners sufficient time to pay before the due date. In others, they are shorter like Net 15 or Net 21.

Discount for early payments:

The other notation in Net term payment is 2% 10, Net 30. The term encourages payments in a shorter time frame by offering special discounts. The idea is to offer a discount of 2% to the clients only if the payment is received in full within 10 days of the date of invoice. However, the due date for payment remains the same as Net 30.

Interest on delayed payments:

Understanding the client behavior most companies use the Net term to charge interest for the late payments.

Some people may charge 2% interest on late payment and the other 5% after the due date. It is your personal choice how you want to deal with the late payers. But remember, this should not affect your brand image and customer relationship.

Getting most from the Net term as a freelancer

Ways to protect you from odds:

Naturally, people tend to buy things and choose services when they don’t have to pay immediately. Additionally the interest-free credit extension with Net term approach- acts as an incentive for the clients in choosing services on Net terms basis.

While it seems pleasing for a larger business, the approach is never the same for everyone. Businesses with a wide client base can manage with a longer payment model. They may use a rotating payment cycle to manage cash flow. But As a freelancer when you are entirely relying on a single client, the Net term of longer duration is a bit stressful.

Not all bad, if used carefully and smartly the Net term approach has many benefits to offer you as a freelancer. Listed here are the important precautions that you should be taken while finalizing payment terms for any task.

Agreement with the clients:

There are many misconceptions about the Net term. For example when we say Net 30- some may believe that the 30 days starts from the date invoice is received-which is wrong. Others might say that 30 means when your client gets paid from his respective clients – which may add 30 extra days to your exact due date.

You should have an agreement with your clients about all the terms – when the 30 days start and what is the due date. This will ensure you and your clients are on the same page.

Discuss late fee with clients:

You should value the relationship you have with your customers and make sure you discuss all the terms and conditions of the late payments beforehand. Don’t forget to include the interest charges on the invoices too. This is an important step you need to take if you don’t like to chase clients for dues.


Net 30 is the standard form of trade credit however for a freelancer waiting for 30 days for the payment seems uninviting. One should refrain from using it and instead opt for a 10 or 14 days term plan to offer their clients.

Net 30 – big no for new customers:

Though, Net 30 is a default payment term used on most types of invoices. You need to always play safe with a new client. It is always recommended to switch to shorter terms say Net 21 or Net 15 in such cases. Once a better client relationship is maintained then you can start with the Net 30 approach.

Adopting these tips will help you protect yourself against shortcomings of Net term payment policy.

Confused! Do Net term plans suit your work as a freelancer?

The answer depends on your business requirement. Although it is most common in the world of large business, many freelancers and small businesses are adopting the approach to win more clients. If Net term suits your business, all you need to do is adopt the above-mentioned tips to stay protected. Also, list all the terms and conditions in the contract and don’t forget to discuss them with clients. If you both agree to all these conditions then you are set to excel with your freelancing plan.

Good luck!