You’ve finished the work, sent the invoice — now how long should you give clients to pay? Payment terms set clear expectations and help you get paid on time. Here’s what the common terms actually mean and how to choose the right ones for your business.
What Are Payment Terms?
Payment terms tell your customer when and how you expect to be paid. They appear on your invoice, usually near the total amount or at the bottom. Clear terms reduce confusion and give you grounds to chase late payments.
Common Payment Terms Decoded
Due on Receipt — Payment expected immediately when the invoice is received. Best for one-off jobs or new clients you haven’t worked with before.
Net 7 — Payment due within 7 days of the invoice date. Good for smaller jobs or when cash flow is tight.
Net 14 — Payment due within 14 days. A reasonable middle ground that’s increasingly common for small businesses.
Net 30 — Payment due within 30 days. The traditional standard, especially for B2B invoices. Gives clients time to process the invoice through their accounts department.
Net 60 / Net 90 — Payment due within 60 or 90 days. Common when working with larger companies or corporations who have longer payment cycles. Be cautious — this ties up your cash for a long time.
End of Month (EOM) — Payment due at the end of the month in which the invoice is received. So an invoice sent on 10th March would be due by 31st March.
15 MFI (Month Following Invoice) — Payment due by the 15th of the month after the invoice date. An invoice sent any time in March would be due by 15th April.
Which Terms Should You Use?
Consider these factors:
Your cash flow needs. If you have regular outgoings like rent, materials, or wages, shorter terms keep money coming in. Net 14 or Net 7 might suit you better than Net 30.
Industry norms. Some industries have standard expectations. Freelancers and tradespeople often use shorter terms, while professional services and B2B suppliers commonly offer Net 30.
Client size. Larger companies often have rigid payment cycles and may push for Net 30 or longer. Smaller businesses and individuals can usually pay faster.
Your relationship. New clients might get stricter terms until trust is established. Long-standing reliable clients might earn more flexibility.
Offering Early Payment Discounts
Some businesses encourage faster payment with discounts. You might see terms written as:
2/10 Net 30 — This means “take 2% off if you pay within 10 days, otherwise the full amount is due in 30 days.”
This can work well if your margins allow it, but calculate carefully. A 2% discount for 20 days early payment actually works out to roughly 36% annual interest — a high price for faster cash.
Making Your Terms Stick
To improve your chances of being paid on time:
- State terms clearly on every invoice
- Mention terms before starting work, ideally in your quote or contract
- Send invoices promptly — delays on your end invite delays on theirs
- Follow up the day after a payment becomes overdue
Changing Your Terms
If you’re tightening up payment terms for existing clients, give them notice. A simple email explaining that from next month you’re moving to Net 14 is courteous and avoids surprises.
Whatever terms you choose, apply them consistently. Clear expectations make for smoother client relationships and steadier cash flow.
You have the legal right to charge interest on late payments — see our guide on late payment interest.