Invoice Payment Terms Explained: Net 30, Net 15, Due on Receipt

What Are Invoice Payment Terms?

Payment terms are the conditions you set for when and how a client should pay your invoice. They appear on every invoice you send and form part of the contractual agreement between you and your client.

The terms you choose directly impact your cash flow. Set them too generously and you're essentially giving clients an interest-free loan. Set them too aggressively for large enterprise clients and you may face friction.

Common Payment Terms Explained

Due on Receipt — Payment is expected immediately when the invoice is received. Best for small projects, one-time clients, or when you've already delivered the work.

Net 15 — Payment is due within 15 calendar days of the invoice date. This is the sweet spot for most freelancers — professional but doesn't leave you waiting.

Net 30 — Payment is due within 30 days. The traditional standard in B2B commerce. Larger companies often default to this because their accounts payable departments process payments in batches.

Net 60 / Net 90 — Payment due within 60 or 90 days. Common with large enterprises and government contracts. Avoid these unless the contract value justifies the wait or you can negotiate a deposit upfront.

2/10 Net 30 — A 2% early payment discount if paid within 10 days, otherwise full amount due in 30. A powerful incentive for prompt payment.

50% Upfront, 50% on Completion — Splits the payment into a deposit and final payment. Ideal for larger projects to reduce risk on both sides.

How to Choose the Right Terms

Your payment terms should reflect three factors:

1. Client type — Startups and small businesses can usually pay Net 15 or on receipt. Enterprise clients may require Net 30+, but you can negotiate a deposit.

2. Project size — For projects under $2,000, due on receipt or Net 15 is standard. For projects over $5,000, milestone-based payments protect both parties.

3. Relationship history — First-time clients should get shorter terms (Net 15 or deposit). Long-standing clients with good payment history can earn more flexible terms.

The golden rule: start with shorter terms and only extend them if the client requests it and you're comfortable with their payment history.

Enforcing Your Payment Terms

Setting terms is one thing — enforcing them is another.

Include terms on the invoice — Don't just discuss them verbally. Print them clearly on every invoice.

Send automatic reminders — A gentle reminder 3 days before the due date and again on the day it's due reduces late payments dramatically.

Charge late fees — Include a late fee clause in your contract and on invoices (1–1.5% per month is standard). Even if you rarely enforce it, it creates accountability.

Pause work on overdue accounts — If a client is 30+ days overdue, pause all active work until payment is received. This is standard business practice, not unprofessional.

Use invoicing software — Tools like Invoice Tracker automate reminders and track overdue invoices so nothing slips through the cracks.