Why Payment Terms Matter
Payment terms set expectations from the start. Without them, clients have no clear deadline for when payment is due — which often means they'll pay whenever it's convenient for them, not when you need the money. Clear, professional payment terms are one of the most powerful tools you have for controlling your cash flow.
Standard Payment Terms Glossary
- Due on Receipt: Payment expected immediately upon receiving the invoice.
- Net 7: Payment due within 7 days.
- Net 14: Payment due within 14 days. Popular with freelancers.
- Net 30: Payment due within 30 days. Standard for B2B.
- Net 60 / Net 90: Extended terms for large corporate clients.
- 2/10 Net 30: 2% discount if paid within 10 days, otherwise full amount due in 30.
- EOM (End of Month): Payment due at the end of the month the invoice was issued.
Choosing the Right Terms for Your Business
Shorter payment terms are almost always better for your cash flow. For most freelancers and small businesses, Net 14 strikes a good balance between giving clients time to process payment and ensuring you don't wait too long. If your clients are large corporations with formal payment cycles, Net 30 may be unavoidable.
Using Early Payment Discounts
Offering a small discount (e.g., 2%) for paying within 10 days can be very effective with larger clients who have the budget to pay early. Even though you receive slightly less money, having cash in hand weeks earlier is often worth more than the discount you give away.
Late Payment Fees: Should You Charge Them?
Charging late fees (typically 1–2% per month on the outstanding balance) is a legitimate business practice. However, it only works if you clearly communicate the policy before starting work. State it in your contract, in your invoice notes, and on your terms page. Springing a late fee on a client who wasn't expecting it damages the relationship.
Include custom payment terms on every invoice — free and instant.
Create Free Invoice →How to State Payment Terms on an Invoice
Use the notes section of your invoice for payment instructions. A good example: "Payment due within 30 days of invoice date. Please transfer to [Bank details]. Late payments are subject to a 1.5% monthly fee."
Following Up on Unpaid Invoices
A structured follow-up system makes all the difference. Send a friendly reminder 3 days before the due date, a polite follow-up on the due date itself, and a firmer message 7 days after. Most late payments are resolved with a simple reminder — clients often just forget.