Invoice Payment Terms Explained: Net 15, Net 30, Deposits, and Late Fees
You did the work and sent the bill, and now you are waiting. How long you wait depends almost entirely on your invoice payment terms, the small line most people paste in without thinking. Net 30, due on receipt, a deposit up front: each one changes the day the money actually reaches your account.
This guide keeps it plain. Every term you will meet, what each one does to your cash, and how to choose the right one for each client. Then a worked example that shows what a single word on an invoice is worth.
What payment terms actually do
A payment term is a deadline. It tells the client the last day they can pay without being late. It also sets the tone. Loose terms invite slow payment. Clear terms, written where the client can see them, get you paid sooner.
Two things live in every term: how long the client has, and when the clock starts. Most terms start the clock on the invoice date. A few start it at the end of the month. Miss that detail and your due date can be off by weeks.
The common terms, one line each
Here is what each term means and what it does to your cash:
- Due on receipt - Payment is expected the day the invoice arrives. This is the fastest option for your cash. Best for one-off jobs and brand-new clients.
- Net 15 - Due within 15 days of the invoice date. A fair middle ground for freelancers who need steady cash flow.
- Net 30 - Due within 30 days. The default for established companies. It means you wait a full month for money you already earned.
- Net 60 - Due within 60 days. Common with large firms and agencies. Easy on them, hard on your bank balance. Push back if you can.
- EOM (end of month) - The clock starts at the end of the month the invoice was issued, not the invoice date. "Net 15 EOM" means the bill is due 15 days after the month closes.
- 2/10 Net 30 - An early-payment discount. The client takes 2% off if they pay within 10 days, otherwise the full amount is due in 30. You trade a small cut for faster cash.
Most freelancers only need three of these: due on receipt, Net 15, and Net 30. The rest show up once you bill bigger companies. Learn them anyway, so a purchase order that reads "Net 60 EOM" does not catch you off guard.
Deposits and progress payments are terms too
A deposit is a payment term you set before the work starts. You ask for part of the total up front, then bill the rest at the end. On a $3,000 job, a 50% deposit means $1,500 lands before you lift a finger and $1,500 comes on delivery.
Progress payments split a long job into stages. You bill as you hit milestones instead of waiting for the finish. A common split is 50% up front, 25% at the midpoint, and 25% on completion. This keeps cash coming in and caps how much unpaid work you carry at any one time.
Both protect you the same way. You are not funding the whole project out of your own pocket while you wait for one payment at the end. For how to structure these on bigger jobs, see our guide to deposits and retainers.
How late fees work
A late fee is a charge you add when a client pays after the due date. It only holds up if you state it on the invoice before the bill goes late. Spring it on a client after the fact and you will fight about it.
There are two common shapes:
- A flat fee - A fixed amount, say $25, added once the invoice passes its due date.
- A monthly percentage - A rate, often 1.5% per month, on the unpaid balance until it clears. On a $2,000 invoice that is $30 for each month it runs late.
Write the policy in plain words near the terms: "A late fee of 1.5% per month applies to balances past due." Check your local rules first, since some states cap the rate you can charge. The point is not to earn fee income. It is to give the client a reason to pay on time.
Which terms for which client
Match the term to the risk:
- New clients - Ask for a deposit, or use due on receipt, until they have paid you cleanly a few times. You have no history yet, so protect yourself.
- Small clients and individuals - Shorter terms, Net 15 or due on receipt. Small operations run on tight cash, and a bill is easy for them to lose track of.
- Established companies - Net 30, because many of them require it. Their accounts payable runs on a 30-day cycle and they will not change it for one vendor.
- Anyone who has paid you late before - Tighten the term or ask for a deposit. Past behavior is the best predictor you have.
You do not need one policy for everyone. Set a default you can live with, then adjust per client based on how they actually pay.
Write the calendar date, not only the term
"Net 30" makes the client do math. "Due September 22, 2025" does not. Always put the exact due date on the invoice, spelled out, right next to the term.
The reason is simple. A client who reads "Net 30" has to find the invoice date, count 30 days, and land on a deadline. Half of them will not bother. A hard date removes the excuse and gives you a clean line for a reminder: "This was due on September 22." When you build invoices in SettleDue, you set the term and the due date prints on the invoice, so the client sees the real deadline, not a formula.
What terms do to your cash: a worked example
Say you send a $2,400 invoice on September 1.
- Due on receipt - The client pays around September 1 to 3. You have the money that week.
- Net 30 - The same $2,400 is not due until October 1. If the client pays on the last day, which many do, you wait a full month for work you finished in August.
Now add a slow client. On Net 30 they pay a week late, so the cash arrives October 8, five weeks after you billed. On due on receipt, a week late still puts you at September 8. Same client, same habits, but the term you picked moved your payday by nearly a month.
This is why the term matters more than the number on the invoice. A $2,400 bill paid in three days beats a $2,600 bill paid in six weeks when rent is due. You can set either term in SettleDue and the due date updates to match.
Set your terms and get paid on schedule
Pick a default term you can live with. Write the exact due date on every invoice. State your late fee up front, and ask new clients for a deposit. Do that and you stop guessing when money will show up.
SettleDue lets you set payment terms, print the due date on every invoice, and record payments as they come in, including partial payments and deposits. You always know who owes you and when the balance is due. It has been doing this for freelancers and trades since 2011.
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