Payment terms are the section of an invoice that tells your client when they need to pay. They sound simple, but choosing the wrong terms is one of the most common reasons freelancers and small businesses end up with cash flow problems.
Here's what every term means, which ones to use in different situations, and how to set terms that actually protect your business.
The Common Payment Terms, Explained
Due on Receipt
What it means: Payment is expected immediately when the invoice is received.
Best for: Small jobs, quick-turnaround work, one-off projects with new clients, or any time you need cash quickly. Some larger clients will push back on this for substantial amounts, so it works best for invoices under $1,000 to $2,000. Read the full guide to due upon receipt for when an invoice marked this way counts as late.
Net 7
What it means: Payment is due within 7 calendar days of the invoice date.
Best for: Most freelance work. Short enough to maintain healthy cash flow, reasonable enough that clients can process it without escalating through procurement. This is the default we recommend for most independent contractors. Read the full guide to net 7 and net 10 payment terms for due date tables and why net 7 suits weekly billing.
Net 14 / Net 15
What it means: Payment due within 14 or 15 days.
Best for: Slightly larger projects or clients who have a weekly accounts payable cycle. Gives them one or two processing windows without extending your wait significantly. Read the full guide to net 15 payment terms for due date examples and a comparison with net 14 and net 30.
Net 30
What it means: Payment due within 30 calendar days.
Best for: Corporate clients with formal AP departments who require this term by policy. Avoid offering Net 30 proactively. It's a 30-day free loan to your client. Read the full guide to net 30 payment terms for due date examples and variations like net 30 EOM.
Net 60 / Net 90
What it means: Payment due in 60 or 90 days.
Best for: Large enterprise clients only, and only when negotiated explicitly. For small businesses and freelancers, these terms create serious cash flow problems. Read the full guide to net 60 payment terms for due date examples, the cash flow cost, and how to negotiate them down. If a client asks for 60 days, net 45 payment terms are a common middle ground.
EOM (End of Month)
What it means: EOM payment terms start the clock at the end of the month the invoice is dated, not on the invoice date. Net 30 EOM means payment is due 30 days after that month ends. 10 EOM, also written "10th prox", means payment is due on the 10th of the following month.
| Invoice date | Net 30 | Net 30 EOM | 10th prox |
|---|---|---|---|
| October 1, 2026 | October 31 (30 days) | November 30 (60 days) | November 10 (40 days) |
| October 28, 2026 | November 27 (30 days) | November 30 (33 days) | November 10 (13 days) |
Best for: Clients whose accounts payable team pays suppliers in one monthly run. An invoice dated October 1 waits twice as long under net 30 EOM as under plain net 30, so if a client insists on EOM, send your invoices in the last few days of the month. If your billing can't move, ask for plain net terms instead.
50% Upfront / 50% on Completion
What it means: Half is invoiced before work starts, half on delivery.
Best for: Large projects (typically $5,000+), new clients, or any project with significant time investment. Protects you against non-payment and ensures you have working capital during the project. Read the full guide to payment in advance for CIA, PIA and COD terms and how to invoice a deposit.
Which Terms Should You Use?
| Scenario | Recommended Terms |
|---|---|
| Small job, any client | Due on Receipt or Net 7 |
| Standard freelance project | Net 7 or Net 14 |
| Ongoing client, established relationship | Net 14 or Net 30 |
| Corporate client with AP process | Net 30 |
| Large project, new client | 50% upfront + Net 7 on completion |
| Monthly retainer | Due on 1st of month (automated) |
The key principle: negotiate for shorter terms whenever possible. Net 30 is standard in corporate procurement, but most freelancers aren't bound by those conventions. If a client doesn't push back on Net 7, you just improved your cash flow by 23 days.
How Payment Terms Affect Your Cash Flow
The math is stark. If you invoice $5,000/month in project work:
- Due on Receipt → $5,000 arrives in your account within 1 to 3 days
- Net 7 → $5,000 arrives within 7 to 10 days
- Net 30 → $5,000 arrives within 30 to 35 days
At Net 30, you're always carrying a month's worth of completed work that hasn't been paid yet. If you have two clients, both on Net 30, you could have $10,000 of outstanding invoices at any given time, even if no one is actually late.
Shorter terms don't just improve cash flow; they also reduce the risk of late payment. An invoice due in 7 days gets paid in 7 days. An invoice due in 30 days often gets paid in 45.
Late Payment Penalties
Adding a late fee clause to your invoices is one of the most effective things you can do to speed up payment. A typical clause:
"Invoices unpaid after the due date are subject to a 1.5% per month late payment fee."
The late fee calculator works out what a clause like this adds to an overdue invoice and writes the wording for you.
Include this in your contract and on the invoice itself. You don't have to enforce it aggressively. The mere existence of the clause signals that you track payment dates and take them seriously. That alone is often enough to move you up the priority list when a client's AP team is deciding which invoices to process this week.
Early Payment Discounts
The reverse of a late fee: offer a small discount for paying ahead of schedule.
"2/10 Net 30" means: 2% discount if paid within 10 days, otherwise full amount due within 30 days.
Large companies with cash-management programs actively look for early payment discount opportunities. Offering 1 to 2% can get your invoice paid in days instead of weeks. Read the full guide to 2/10 net 30 to see what the discount costs you and when it pays off.
Setting Terms on Retainer Invoices
Monthly retainers are the most predictable income a freelancer can have, and they're also where poor terms cause the most damage.
Set retainer invoices to go out on the same date every month, due 7 days later. For example: "Invoice sent on the 1st, due by the 8th." Clients know when to expect it, their AP department builds it into their schedule, and you receive payment on a predictable cycle.
Better yet: automate the invoicing entirely. With recurring billing software, the invoice generates and sends automatically every month. You never have to think about it.
Displaying Terms on Invoices
Don't just write "Net 30". Write the actual due date. "Payment due by 15 May 2026" is clearer and harder to misinterpret than "Net 30 from invoice date."
Include your payment methods prominently. If you accept online payments via card or PayPal, say so, and include a payment link. The easier you make it to pay, the faster you get paid.
Payment Terms Guides
Each of these guides covers one term in depth, with due date tables and wording you can copy onto your invoices:
- Due upon receipt: payment is expected as soon as the client gets the invoice.
- Net 7 and net 10 payment terms: payment is due 7 or 10 days after the invoice date, with a weekly billing example.
- Net 15 payment terms: payment is due 15 days after the invoice date, compared with net 14 and net 30.
- Net 30 payment terms: payment is due 30 days after the invoice date, with due date examples and variations.
- 2/10 net 30: a 2% discount for paying within 10 days, with the full amount due in 30.
- Net 45 payment terms: payment is due 45 days after the invoice date, with a month-by-month comparison against net 30 and net 60.
- Net 60 payment terms: payment is due 60 days after the invoice date, compared with net 30 and net 90.
- Payment in advance: the client pays before work starts, including CIA, PIA, COD and deposits.
For short definitions of related terms, such as late fee, partial payment and accounts receivable, see the invoicing glossary.
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