Payment terms explained: Net 7, Net 30 and due on receipt

What payment terms are

Payment terms say when an invoice has to be paid. They go on the invoice, usually near the date, and they are the date your client is measured against if payment is late.

The common ones

Due on receipt means payment is expected as soon as the invoice is received. Net 7, Net 15 and Net 30 mean payment is due that many days after the invoice date. So an invoice dated 1 March with Net 30 terms is due 31 March.

In this tool, type Net 30 into Payment terms and the due date fills in from the invoice date. If you type your own due date, it is left alone.

Choosing terms

Shorter terms mean you are paid sooner, but large clients often have a standard payment cycle and will not change it. Individuals and small clients usually pay faster when terms are short and how to pay is easy.

Whatever you choose, agree it before the work starts, and put it in your quote or contract as well as on the invoice. Terms are much easier to rely on if the client accepted them first.

Discounts for early payment

Some businesses offer a small reduction for paying early. It is written in the terms, for example a percentage off if paid within a set number of days. If you offer it, say it clearly on the invoice and make sure you can afford it.

Questions

What does Net 30 mean?

Payment is due 30 days after the invoice date.

Can I change terms for one client?

Yes. Terms are an agreement between you and the client. Put whatever you agreed on that client's invoice.