Invoice payment terms
Payment terms are the only part of an invoice you agree before the work and read after it. Most of what goes wrong with getting paid was decided here, in a sentence nobody argued about.
The vocabulary
- Net 30 — the full amount, thirty days from the invoice date. Net 7, Net 14, Net 15, Net 45, Net 60 are the same idea with a different number.
- Payable on receipt — now, in theory. It is the vaguest common term and it invites the client to decide for themselves.
- 2/10 net 30 — two per cent off if paid within ten days, otherwise the full amount at thirty. An early-payment discount you are buying.
- EOM — from the end of the month the invoice is dated, not from the invoice. "Net 30 EOM" on 3 March means 30 April, which is nearly sixty days.
- Instalments / milestones — the sum split across dates or deliverables, each with a date of its own.
- Deposit / advance — paid before the work starts. The most effective term on this list.
Write a date, not a term
"Net 30" makes your client do arithmetic and they will do it in their own favour — from the day they received it, or opened it, or approved it. Due 30 November cannot be recalculated. Perly puts both on the document: your terms in words and the due date worked out for you, in the reader's own timezone so neither of you sees it turn overdue a day early.
Which terms actually get paid
- Shorter is paid sooner, up to a point — Net 14 is paid faster than Net 30, and Net 7 mostly just annoys people.
- A deposit changes the relationship. A client who has paid something is a client who pays.
- Avoid a Friday due date. It is paid on Monday, and at month end that is a different month.
- Big companies pay on their cycle, not yours. Find out the run date and invoice a week before it; arguing Net 30 at a company that pays on the 25th only ever loses.
- Say what late costs — interest or a fee, agreed in advance. The number matters less than the fact that it was agreed.
Late-payment terms that hold
Interest on an overdue invoice is generally only chargeable if the contract said so before the work, though many places also set a statutory rate for late commercial payment that applies whether or not anybody wrote it down. Put the clause in the engagement, repeat it on every invoice, and it will be there on the one occasion you need it. What applies to you depends on your jurisdiction — that part is a question for a lawyer, not an invoicing tool.
What happens the day a date passes is overdue invoices.
Common questions
- Does Net 30 start from the invoice date or from delivery?
- From the invoice date unless the contract says otherwise. This is exactly the ambiguity a written due date removes.
- What are the most common terms for freelancers?
- Net 14 or Net 30, often with a deposit on anything long. Agencies billing corporates usually end up on Net 30 or Net 45 whether they like it or not.
- Can I change terms on an existing client?
- Yes, for future work, in writing, before you start it. Changing them on an invoice for work already done is a conversation, not a clause.
- Is a deposit legal?
- Perfectly, and normal. Put the amount, when it is due and what it entitles them to in the engagement, and invoice it as its own document.
- Do terms differ across borders?
- In law, yes — statutory late-payment rules vary and some public bodies have mandated maximums. In practice the bigger difference is the payment run. See [international invoicing](/international-invoicing).
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