Invoice Payment Terms Explained: Net 30, Net 15, and More

Payment terms define the timeframe within which a client must pay an invoice after receiving it. They appear on your invoice and, ideally, in your client contract as well. Clear payment terms prevent disputes and set professional expectations from the start.

Here are the standard terms you'll encounter in business-to-business invoicing:

• Net 7 — Payment due 7 days after invoice date. Rarely used outside of very short-term projects or established relationships.
• Net 14 — 14-day window. Popular with freelancers who want faster payment without the friction of Net 7.
• Net 30 — The most common business standard. Payment due 30 days after invoice date.
• Net 45 / Net 60 — Extended terms common in corporate procurement. Acceptable if your contract rates compensate for the wait.
• Due on receipt — Payment expected immediately upon receiving the invoice. Appropriate for one-time or prepaid services.
• 2/10 Net 30 — A 2% discount if paid within 10 days; otherwise full amount due in 30. Encourages early payment without making it mandatory.

If you have 10 clients all on Net 30 and you invoice each one on a rolling basis throughout the month, you could have receivables spread across 60+ days at any given time. The fix is to align terms to your own cost cycle:

• If you pay contractors or subscriptions weekly, use Net 14 or Net 7.
• If your costs are monthly (rent, software), Net 30 works fine.
• Always bill immediately upon delivery — a Net 30 clock doesn't start until the invoice is sent.

The "2/10 Net 30" structure gives clients a 2% discount for paying within 10 days. That sounds small, but annualised it's a ~36% return on their working capital — most clients with available cash will take it.

For you, receiving 98% of revenue 20 days earlier can be worth more than 2% in saved interest, overdraft fees, or simply the peace of mind of a full bank account.

State your late-payment policy on every invoice and in your contract. Typical rates are 1–1.5% per month (12–18% annually) on the overdue balance. To enforce them:

1. Include the policy in your original contract so it can't be disputed later.
2. Restate it in the notes section of every invoice: "Invoices unpaid after the due date accrue a 1.5% monthly late fee."
3. Add the accrued fee to your next invoice — don't wait until the debt is large.
4. Be consistent. Waiving fees ad hoc teaches clients the deadline isn't real.