Payment Terms

What are payment terms?

Payment terms define when payment is due, how clients can pay, and what happens if they pay late. Standard terms like Net 30 indicate payment is due within 30 days. Terms should be clearly stated on every invoice and ideally agreed upon before work begins.

Clear payment terms reduce confusion and give you grounds to follow up on late payments.

Common payment terms

Standard terms you might use:

• Due on Receipt — Payment expected immediately upon receiving the invoice
• Net 7/14/30 — Payment due within 7, 14, or 30 days
• 2/10 Net 30 — 2% discount if paid within 10 days, otherwise due in 30
• 50% deposit — Half upfront, balance on completion
• Progress payments — Payments tied to project milestones

Setting your payment terms

Consider your cash flow needs, industry norms, and client relationships. Shorter terms improve cash flow but may not suit all clients. Include payment terms on quotes and contracts, not just invoices, so there are no surprises.