Guide
Payment terms tell your client exactly when they're expected to pay. They may look like shorthand — "Net 30," "2/10 Net 30," "Due on receipt" — but each has a precise meaning. Choosing the right term, and stating it clearly, is one of the simplest ways to keep your cash flow healthy.
"Net" refers to the full amount owed, and the number that follows is the number of days the client has to pay it, counted from the invoice date. So Net 30 means the total is due within 30 days. Net 15 and Net 60 work identically with 15- and 60-day windows.
One detail worth nailing down: the clock usually starts on the invoice date, but some contracts count from the date goods are delivered or the date the client receives the invoice. Those can be days or weeks apart. Spell out which one you mean — "Net 30 from invoice date" — so a delivered-versus-received disagreement never costs you a payment cycle.
Net 30 became the business-to-business default partly because it mirrors how large organizations pay. Under the federal Prompt Payment rules, U.S. government agencies are generally required to pay a proper invoice within 30 days of receiving it, or pay interest on the balance — a standard administered by the Treasury's Bureau of the Fiscal Service (Prompt Payment, U.S. Treasury). That 30-day benchmark filtered into private-sector norms, which is why Net 30 feels "standard" even though nothing obligates a private client to use it. You are free to set shorter terms.
| Term | Meaning |
|---|---|
| Due on receipt | Payment expected immediately |
| Net 7 / Net 15 | Due within 7 or 15 days |
| Net 30 | Due within 30 days — the B2B standard |
| Net 60 / Net 90 | Due within 60 or 90 days |
In the free invoice generator, choosing a term from the dropdown automatically fills in the correct due date, so you never have to calculate it by hand.
Shorter terms get you paid faster but ask more of the client. A useful rule of thumb:
You can encourage faster payment by offering a small discount for paying early. The classic notation 2/10 Net 30 means "take a 2% discount if you pay within 10 days; otherwise the full amount is due in 30 days." Even a modest discount can meaningfully speed up your incoming cash — just make sure the math still works for your margins.
It helps to see what that discount really costs you. With 2/10 Net 30, you're giving up 2% to be paid 20 days sooner (day 10 instead of day 30). Annualize it and the effective rate is steep:
| Step | Figure |
|---|---|
| Discount given up | 2% of the invoice |
| Days accelerated | 20 (day 10 vs day 30) |
| Annualized cost ≈ (2 ÷ 98) × (365 ÷ 20) | ≈ 37% |
Roughly 37% on an annualized basis is a lot to pay for cash flow, so reserve early-payment discounts for situations where getting paid quickly genuinely matters — a cash crunch, a slow-paying client you want to retrain, or a large invoice you'd rather not chase. From the buyer's side, of course, taking a 2% discount to pay 20 days early is an excellent return, which is exactly why the incentive works.
Many businesses add a late-fee policy to their terms, such as 1.5% per month on overdue balances, to discourage slow payment. Whatever you choose, state it plainly on the invoice and, ideally, agree to it up front in your contract or engagement so there are no surprises. Late-fee limits are set by state law and vary, so confirm what's enforceable where you operate before you rely on a specific percentage.
Payment terms cut in two directions. When you're the one paying suppliers, the U.S. Small Business Administration notes that longer terms such as Net 30, 45, or 60 let you "conserve cash flow" by keeping money in your account longer, and it advises businesses to "issue invoices immediately and have a follow-up system for collecting" on the receivable side (SBA: How Net 30 Accounts Help Conserve Business Cash Flow). In other words: negotiate the longest terms you reasonably can on what you owe, and the shortest your clients will accept on what they owe you.
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Getting this balance right is really a cash-flow skill, and it's one worth studying. A well-reviewed small-business cash-flow book can help you set terms, price jobs, and time your payables with your future self in mind.
| Mistake | Fix |
|---|---|
| "Net 30" with no calendar date | Also print the exact due date |
| Ambiguous start date | State "from invoice date" |
| Discount offered but never enforced | Honor it only within the stated window |
| Late fee not agreed up front | Put it in the contract, then the invoice |
The best payment term is one the client can't overlook. Show both the term and the exact due date, and include your payment instructions right beside them. The invoice generator places all of this clearly on the finished PDF, and choosing a term from the dropdown fills in the matching due date automatically. For more ways to shorten the gap between sending and getting paid, see our guide to getting invoices paid faster.
Is "Due on receipt" the same as "Net 0"? Effectively yes — both mean payment is expected as soon as the client gets the invoice. "Due on receipt" is the clearer wording most clients recognize.
Can I change terms partway through a relationship? Yes, but give notice. Announce new terms before the next invoice rather than springing them on a client mid-project, and update your contract if you have one.
What term should a brand-new client get? Shorter is safer until trust is established — Due on receipt, Net 7, or a deposit up front. You can extend to Net 30 once they've paid a few invoices reliably.