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

What "Net 30" really means

Payment terms tell the client how long they have to pay after the invoice date. "Net 30" means the full amount is due 30 days after the invoice is issued. "Net 15" means 15 days, and "Due on receipt" means payment is expected immediately.

These terms are conventions, not laws. They only bind the client if you state them on the invoice or in your contract, so put them in both places.

Choosing terms for your situation

Longer terms are friendlier to the client but harder on your cash flow. As a rule, the smaller your business, the shorter your terms should be, because you have less buffer to absorb delays.

• Due on receipt or Net 7: good for small projects, new clients, and individuals.
• Net 15: a sensible default for most freelancers working with small companies.
• Net 30: standard for larger companies, whose accounts-payable cycles often run monthly.
• Net 45 or Net 60: common in big corporations. Consider whether you can afford to wait, or ask for a deposit to compensate.

Deposits and milestone billing

For larger projects, do not wait until the end to invoice. A common structure is 30 to 50 percent upfront, with the balance split across milestones or due on delivery. A deposit filters out clients who are not serious and funds the early work.

Write the schedule into your proposal so each invoice is a predictable, expected event rather than a surprise.

Early-payment discounts

Some businesses offer terms like "2/10 Net 30", meaning a 2 percent discount if paid within 10 days, otherwise the full amount in 30. This can speed up payment, but calculate whether the discount is worth it. A 2 percent discount for paying 20 days early is a very high annualised cost.

Writing a late-fee clause

A late-fee clause should be stated up front, be proportionate, and comply with local law, which often caps interest on late commercial payments. A typical example: "Invoices unpaid after the due date accrue interest at 1.5% per month."

Many freelancers never actually charge the fee but keep the clause as a nudge. Whether you enforce it or not, having it on the invoice shows that the deadline is real.

This article is general information and not legal advice. If a large sum is at stake, ask a local accountant or lawyer to review your terms.