Payment terms are the agreement about when money moves. They are usually set once, casually, at the start of a relationship, and then quietly govern your bank balance for years. Choosing them deliberately is one of the cheapest improvements available to a small business.
The common terms
Due on receipt
Payment is expected as soon as the invoice arrives. It works with individuals and small businesses who pay from a personal or single-signatory account. It does not work with any organisation that runs a payment cycle — their system will simply put it in the next run regardless of what your invoice says, and you will have created an instantly overdue document for no benefit.
Net 7 / Net 14
Payment within seven or fourteen days of the invoice date. A reasonable default for freelance work with responsive clients, and short enough that a missed payment surfaces while the project is still fresh in everyone's mind.
Net 30
Thirty days. The default in most corporate accounts payable systems, which is precisely why it is worth understanding: if a client's process is Net 30, writing Net 14 on the invoice changes nothing except making the invoice look overdue on day 15. Ask about the cycle before you set the term.
Net 45 / Net 60 and beyond
Common with large enterprises and public sector buyers. If you must accept it, price it in. Sixty days of financing is a real cost to you, and it is legitimate to reflect that in the rate.
2/10 Net 30
An early-payment discount: two per cent off if paid within ten days, otherwise the full amount in thirty. It can genuinely accelerate payment from clients whose systems support it, but treat the discount as marketing spend and check it is worth it — 2% for twenty days early is an expensive annualised rate.
Deposits and milestones
For anything larger than a few days of work, the term that matters most is not the number after "Net" — it is whether you are paid anything before you start. A common structure:
- 50% up front, balance on delivery. Standard for short projects and new clients.
- Thirds: on signature, at an agreed midpoint, and on delivery. Suits projects running longer than a month.
- Monthly in arrears for ongoing retainers, invoiced on a fixed day each month so it lands in the same payment run every time.
A deposit is not only cash flow. It is the cheapest available signal that a client is real, has budget, and has internal approval. Projects that stall at the deposit stage were going to stall later at greater cost.
Late fees
Stating a late fee is worth doing even if you rarely charge it, because it establishes that the deadline is real. Keep it simple and proportionate — a fixed percentage per month on the overdue balance is typical. Two conditions make it effective: the term must appear in the contract, not only on the invoice, and you must be willing to actually apply it at least once.
Writing terms so they cannot be misread
Always convert the term into a calendar date on the invoice itself. "Net 30" requires the reader to know which date you are counting from; "Due 14 September 2026" does not. Put the date near the total, not buried at the foot of the page, and repeat it in the email body when you send the PDF.
Matching terms to the client
- Individual or sole trader: due on receipt, or Net 7. Payment is one person deciding.
- Small agency or startup: Net 14. Fast enough to matter, slow enough to be processable.
- Large company or public body: Net 30, aligned to their run, with a purchase order number on the invoice. Fighting the cycle is not winnable; getting into the right run is.
- New client, any size: a deposit, whatever the balance terms.
Track what is actually outstanding
Terms only help if you know which invoices have passed their due date. Recording payments — full or partial — against each invoice turns a folder of PDFs into an answer to "how much am I owed?". The invoice dashboard tracks amount paid, remaining balance and overdue status for every invoice you generate, and the follow-up guide covers what to do when a date passes.