Understanding Invoice Payment Terms

This is one of the most common terms. "Net" means the full amount is due, and "D" represents the number of days the client has to pay after the invoice date.

• Net 7: Payment due within 7 calendar days of the invoice date.
• Net 15: Payment due within 15 calendar days of the invoice date.
• Net 30: Payment due within 30 calendar days of the invoice date (very common).
• Net 60: Payment due within 60 calendar days of the invoice date (more common for larger companies).

Payment is expected immediately once the client receives the invoice. While clear, it can sometimes be impractical depending on the client's payment processing cycle. Be prepared for a slight delay even with this term.

Requires the client to pay the full amount before any work begins or goods are delivered. This is common for custom orders, large projects, or new client relationships to mitigate risk.

Payment is due at the time of delivery of goods or completion of service. This is less common for B2B services but used sometimes for physical product deliveries.

This offers an incentive for clients to pay early. "2/10 Net 30" means the client can take a 2% discount if they pay within 10 days; otherwise, the full amount is due within 30 days. It's written as "% discount / discount period days Net total due days".

You can specify that interest will be charged on overdue invoices (e.g., "1.5% interest per month on overdue balances"). Check local regulations regarding maximum allowable interest rates. Clearly stating this upfront can encourage timely payment.

For larger projects, payments can be tied to specific milestones or project stages (e.g., "50% due upon project start, 50% upon completion"). This helps manage cash flow for both parties.