Pronteo

Invoice Payment Terms Explained: Net 30, Due on Receipt and More

3 min read

Payment terms are the line on your invoice that says when you expect the money. Pick them on purpose. The default many people copy, Net 30, is rarely the right one for a small business.

The common terms, in plain English

  • Due on receipt. Pay when you receive the invoice. In practice: within a few days.
  • Net 7, Net 15, Net 30. The full amount is due 7, 15 or 30 days after the invoice date.
  • EOM. Due at the end of the month in which the invoice is issued.
  • 2/10 Net 30. The client can take 2% off if they pay within 10 days; otherwise the full amount is due in 30.
  • 50% upfront, balance on completion. A deposit before the work, the rest when it is done. See how to ask for a deposit.
  • Progress payments. For long jobs: payments at agreed stages.

Which terms suit your work

Homeowners and one-off jobs. Due on receipt, or payment on completion. The client is standing next to you and the work is fresh. This is the moment they are happiest to pay.

Regular business clients. Net 7 or Net 15 works for most small suppliers. Larger companies often pay on fixed cycles and will ask for Net 30 or longer. You can accept, but know what it costs you: you are lending them money for a month.

Long or expensive jobs. Deposit plus progress payments. You should not be financing your client’s materials.

Write a date, not only a term

“Net 15” asks the client to do arithmetic. “Due November 24” does not. Put both if you like, but always put the date. It is also the date you will quote when you follow up on an overdue invoice.

Late fees and interest

A late fee only helps if the client knew about it before the work started. Put it in your quote or contract, then repeat it on the invoice. Something like: “Invoices unpaid after the due date are subject to a late fee of 1.5% per month.”

What you can charge depends on where you are. Some places cap the rate. In the United Kingdom, businesses can claim statutory interest on late commercial payments. Check your local rule before you put a number on your documents.

Many small businesses never actually collect the fee. Its real use is to give the due date some weight.

Make paying easy

Terms set the deadline. The rest of the invoice decides whether it is met:

  • say exactly how to pay, with the details right there;
  • offer more than one method when you can;
  • send the invoice the day the job ends, as a PDF the client can open on any device;
  • keep the document clear. See what to put on an invoice.

Wording you can copy

Payment due within 15 days of the invoice date. Please pay by bank transfer to the account below.

Payment due on completion of the work.

A deposit of 40% is due on acceptance of this quote. The balance is due on completion.

Set your usual terms once and reuse them. In Pronteo, payment terms and notes are part of each document, and you can see at a glance which invoices are past their due date.

Keep reading