Invoice Payment Terms Explained: Net 30, Net 14, and More
Payment terms are the rules of the transaction: when payment is due, what happens if it is late, and what discounts exist for early payment. Choosing the right terms — and writing them clearly — is one of the highest-leverage things a small business can do for cash flow.
What "Net" terms mean
“Net 30” means the full amount is due 30 days after the invoice date. Net 15 and Net 14 are the same idea with shorter windows. “Due on receipt” means payment is expected immediately — common for small jobs and retail-style services.
Longer terms are a form of interest-free credit you extend to your client. Large companies often demand Net 60 or Net 90; small businesses should push back where they can, because waiting three months to be paid can break a freelancer’s cash flow.
Early-payment discounts
Terms like “2/10 Net 30” mean the client gets a 2% discount if they pay within 10 days, otherwise the full amount is due in 30 days. This can meaningfully speed up payment from clients who watch their costs.
Only offer discounts you can afford. A 2% discount for paying 20 days early is roughly equivalent to a 36% annual interest rate — generous, so use it deliberately.
Late-payment terms
State what happens after the due date: a late fee, interest per month, or paused work until the balance is settled. Many places allow statutory interest on late commercial payments — check your local rules.
The point of late terms is not to profit from penalties; it is to make on-time payment the path of least resistance. Clients prioritize invoices that have consequences attached.
Which terms should you choose?
Freelancers and small service businesses: Net 7 to Net 14 keeps cash flowing. Project work: milestone payments (a deposit, mid-project, and final payment) beat one big Net 30 invoice. Retainers: bill monthly in advance.
Whatever you choose, put the terms in your contract or quote first, then repeat them on the invoice. Terms that appear for the first time on the invoice are much harder to enforce.
Frequently asked questions
What does Net 30 mean on an invoice?
The client has 30 days from the invoice date to pay the full amount. Net 15, Net 14, and Net 60 work the same way with different windows.
Is "due on receipt" enforceable?
It sets the expectation of immediate payment, but in practice most clients still take days to process. For truly urgent payment, a deposit or upfront payment works better than wording.
Should I charge late fees?
Stating a late fee or interest term on your invoice and contract meaningfully improves on-time payment. Check what your local law allows before setting the rate.
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