Payment terms are one of the most overlooked parts of invoicing — and one of the most impactful on your cash flow. Choosing the wrong terms can mean waiting two months to get paid for work you completed weeks ago. Here's what every common term means and how to choose.
What "NET" Means
"NET" simply means the number of days the client has to pay after the invoice date. NET 30 means payment is due 30 days after the invoice was issued — not 30 days after the work was completed, which is an important distinction if there's a delay between finishing work and sending the invoice.
Common Payment Terms Explained
| Term | Meaning | Best For |
|---|---|---|
| Due on Receipt | Payment expected immediately upon receiving the invoice | Small jobs, new clients, cash-sensitive freelancers |
| NET 7 | Payment due within 7 days | Fast-moving freelance work, smaller invoices |
| NET 14 | Payment due within 14 days | Most freelancers — a good balance |
| NET 30 | Payment due within 30 days | B2B work, corporate clients, standard business practice |
| NET 60 / NET 90 | Payment due within 60 or 90 days | Large enterprise clients, government contracts (often non-negotiable) |
The Cash Flow Reality of Long Payment Terms
NET 60 might be standard for the client, but it means you're financing their business for two months. If you have multiple NET 60 clients, your effective cash flow lag can be severe. Where possible, especially as a smaller business, push for shorter terms — NET 14 or NET 30 — particularly with new clients who haven't yet earned a track record of paying reliably.
Should You Offer Early Payment Discounts?
Some businesses offer a small discount for early payment, written as e.g. "2/10 Net 30" — meaning a 2% discount if paid within 10 days, otherwise full amount due in 30. This can meaningfully speed up payment for businesses that have the margin to offer it. For freelancers with tighter margins, this often isn't worth it — a late payment fee can be more effective.
Late Payment Fees: Setting Them Up
You can legally charge interest on overdue invoices in many jurisdictions. A common approach: state in your terms "A late fee of 1.5% per month will be applied to overdue balances." Whether you enforce this every time is your choice, but having it stated upfront gives you leverage and signals professionalism.
How to Write Payment Terms on Your Invoice
Be explicit rather than vague. Instead of "payment due soon," write: "Payment due within 14 days of invoice date (by [specific date]). Late payments subject to a 1.5% monthly fee." Specificity removes any ambiguity the client could use to justify a delay.
What If a Client Insists on Longer Terms?
Large corporate clients sometimes have rigid NET 60 or NET 90 policies that aren't negotiable. If you must accept these terms, factor the cash flow delay into your pricing, or request a deposit upfront to offset the long wait for the balance.
Set clear payment terms on every invoice
Add your due date and terms in seconds with our free invoice maker.
Create Free Invoice →