Payment terms tell your client when and how to pay. They also affect your cash flow. Choosing the right terms — and stating them clearly on every invoice — reduces confusion and speeds up payment.
Due on Receipt
Payment is due as soon as the client receives the invoice. No grace period. Best for small amounts, one-off jobs, or when you need fast payment. The downside: some clients need a few days to process. If you use this, send the invoice immediately and make payment instructions very clear.
Net 7, Net 15, Net 30, Net 60
"Net" means the number of calendar days from the invoice date until payment is due. Net 7 = 7 days, Net 30 = 30 days, and so on. Net 30 is the most common in B2B. Net 15 is stricter and improves cash flow. Net 60 gives clients more time but delays your income.
2/10 Net 30 (Early Payment Discount)
This means: pay within 10 days and get a 2% discount; otherwise, the full amount is due in 30 days. Example: $1,000 invoice. Pay by day 10, owe $980. Pay by day 30, owe $1,000. It incentivizes early payment. Use it when you prefer faster cash flow over the small discount.
End of Month (EOM)
Payment is due at the end of the month in which the invoice was issued. An invoice dated February 15 is due February 28 (or 29 in a leap year). Some businesses use "EOM + 30" — due at the end of the month following the invoice month. Common in industries with monthly billing cycles.
Cash on Delivery (COD)
Payment is due when goods are delivered. Used in physical product sales. Not typical for services.
How Payment Terms Affect Cash Flow
Shorter terms mean faster payment. Net 15 gets you paid roughly two weeks sooner than Net 30. If you have 10 clients each owing $1,000, that is $10,000. Getting it in 15 days instead of 30 improves your liquidity. The trade-off: some clients expect Net 30 and may push back on stricter terms. Start with what is standard in your industry and tighten if you can.
How to Choose the Right Terms
Consider your industry, client size, and relationship. Freelancers often use Net 15 or Due on Receipt. Agencies and B2B vendors often use Net 30. Large enterprises may request Net 60. For new clients, shorter terms reduce risk. For established clients with good payment history, you can be more flexible.
How to Enforce Terms
State terms on every invoice. Include them in your contract or quote. If a client pays late, send a reminder and, if your terms allow, add a late fee. Consistent follow-up and clear communication usually get you paid. For repeat offenders, consider shorter terms or upfront deposits.