Payment Terms Explained: Net 7, Net 15, Net 30 and Due on Receipt

You can write the perfect invoice and still wait weeks for payment if you don't set clear payment terms. Terms like "Net 30" or "Due on Receipt" tell the client exactly when you expect to be paid. Without them, many clients simply pay when it suits them.

This guide explains the most common payment terms, how to choose the right one, and how to write them on your invoice.

What Are Payment Terms?

Payment terms are the conditions under which you expect to be paid. They state when payment is due, and they may include discounts for early payment or fees for late payment. They appear on your invoice and usually in your quote or contract too.

Clear payment terms help in three ways:

• They set expectations. The client knows the deadline.

• They improve cash flow. You can plan your income more reliably.

• They give you a basis for follow-up. If the date passes, you have something specific to refer to.

Common Payment Terms Explained

Due on Receipt Payment is expected as soon as the client receives the invoice. This is common for small jobs, consumer clients, and businesses that need fast cash flow.

Net 7 Payment is due within 7 days of the invoice date. A good fit for freelancers and small projects.

Net 10 Payment is due within 10 days of the invoice date.

Net 15 Payment is due within 15 days of the invoice date. A balanced choice for many small businesses.

Net 30 Payment is due within 30 days of the invoice date. This is one of the most common terms in business-to-business work, especially with larger companies.

Net 45, Net 60, Net 90 Longer terms are sometimes required by large organizations. They are harder on your cash flow, so consider whether the client and project justify them.

End of Month (EOM) Payment is due at the end of the month in which the invoice is issued, or sometimes at the end of the following month. Always spell out which one you mean.

Cash in Advance (CIA) or Prepayment The client pays before you start. Common for custom or high-cost work, and for new clients.

Deposit or Partial Payment A percentage is paid upfront, and the balance is due at completion or at set milestones.

Cash on Delivery (COD) Payment is made when goods are delivered. Used mostly for physical products.

Early-Payment Discounts

Some businesses encourage fast payment with a discount. A common format is 2/10 Net 30, meaning:

• 2% discount if paid within 10 days

• Full amount due within 30 days

For a $2,000 invoice, paying within 10 days would reduce the payment by $40, to $1,960. Offering a discount costs you money, so only use it if the faster cash flow is worth it.

Late-Payment Terms

You can also state what happens if the client pays late. Common options include:

• A late fee, such as a flat amount or a percentage

• Interest charged on the overdue balance

• A pause on further work until the balance is paid

Late fees and interest rules vary by location, so check what is allowed and make sure the client has agreed to the terms in advance, ideally in writing.

How to Choose the Right Payment Terms

Consider these factors:

1. Your cash flow. If you rely on quick payments, choose shorter terms or ask for deposits.

2. The client's size. Larger companies often have fixed payment cycles and may insist on Net 30 or longer.

3. The project size. For large projects, break payments into milestones instead of waiting for one big payment.

4. The relationship. New clients may need a deposit or shorter terms. Trusted repeat clients may get more flexibility.

5. Industry norms. What is standard in your field is easier to defend and is less likely to meet resistance.

6. The risk. The higher the risk of non-payment, the more you should lean toward prepayment or shorter terms.

Quick Guide: Which Terms Fit Which Situation?

Situation

Suggested Terms

Small one-off job

Due on Receipt or Net 7

Freelance project

Deposit plus Net 7 or Net 14

New client, larger project

50% upfront, balance on completion

Regular business client

Net 15 or Net 30

Ongoing retainer

Payment at the start of each month

Large corporate client

Net 30 or as required by their process

These are general suggestions, not rules. Adjust them to your business.

How to Write Payment Terms on an Invoice

Keep the wording short and clear. Examples:

• "Payment due within 14 days of invoice date (Net 14)."

• "Due on receipt."

• "Payment due by 15 November 2026."

• "A late fee of 2% applies to balances unpaid after 30 days."

• "50% deposit paid. Remaining 50% due on completion."

Include both the term (such as Net 14) and the actual due date. Showing the date removes any chance of confusion about how to count the days.

Where to Put Payment Terms

• On the invoice, near the total or in a notes section

• In your quote or proposal, before the work begins

• In your contract or agreement, if you use one

• In your email, as a short reminder when you send the invoice

Tips for Getting Paid on Time

• Agree on payment terms before starting the work

• Show the due date clearly, not just the term

• Offer multiple payment methods

• Send the invoice promptly after finishing the work

• Send a polite reminder before and after the due date

• Keep records of what is paid, due, and overdue

Common Mistakes With Payment Terms

Leaving terms out. Without terms, clients set their own timeline.

Using unclear wording. "Pay soon" isn't a term. Use a specific number of days or a date.

Agreeing to very long terms by default. Long terms can strain your cash flow.

Adding late fees the client never agreed to. Surprise charges lead to disputes.

Inconsistent terms. If your quote says Net 14 and your invoice says Net 30, you create confusion.

Final Thoughts

Payment terms are a small detail with a big effect on your income. Pick terms that fit your cash flow and your client, state them clearly with an actual due date, and follow up politely when needed.

When you create an invoice at new invoice generator, add your payment terms and due date in seconds, then download a professional PDF to send.