Payment terms tell your client when and how to pay your invoice. They set expectations upfront and are one of the most important elements of any invoice.

What Are Payment Terms?

Payment terms are the agreed-upon conditions for payment between a seller and buyer. They typically include:

  • When payment is due (e.g., 30 days from the invoice date)
  • How the client can pay (bank transfer, credit card, check)
  • Discounts for paying early
  • Penalties for paying late

Payment terms appear on the invoice itself, usually near the top or in a dedicated "Terms" section.

Common Payment Terms

  • Due on Receipt — payment expected immediately upon receiving the invoice
  • Net 15 — payment due within 15 days of the invoice date
  • Net 30 — payment due within 30 days (the most common standard)
  • Net 60 — payment due within 60 days, common for larger companies
  • Net 90 — payment due within 90 days, typical in manufacturing or government
  • 2/10 Net 30 — 2% discount if paid within 10 days; otherwise full amount due in 30 days
  • 50% Upfront — half the total is due before work begins, the remainder on completion
  • End of Month (EOM) — payment due by the last day of the month in which the invoice was received

How to Choose the Right Terms

Your payment terms depend on your industry, client relationship, and cash flow needs:

  • Freelancers and small businesses often use Net 15 or Due on Receipt to maintain cash flow
  • B2B companies typically offer Net 30 as a standard courtesy
  • Large contracts may use milestone-based payments (e.g., 30% upfront, 40% at midpoint, 30% on completion)
  • New clients — consider shorter terms until trust is established
  • Long-term clients — you may extend to Net 45 or Net 60

Example

A graphic designer sends an invoice for $1,200 with these payment terms:

Payment Terms: Net 15

Invoice Date: November 1, 2026

Due Date: November 16, 2026

Accepted Payment: Bank transfer or PayPal

Late Fee: 1.5% per month on overdue balances

The client knows exactly when to pay, how to pay, and what happens if they are late.

Common Mistakes

  • Not including payment terms at all. Without stated terms, clients may pay whenever they choose.
  • Using vague language. "Pay soon" or "ASAP" is not a payment term. Use specific dates or Net terms.
  • Setting terms too long. Net 60 or Net 90 can strain your cash flow if you are a small business.
  • Forgetting to enforce late fees. If you state a late fee but never charge it, clients learn they can ignore your terms.
  • Not discussing terms before starting work. Payment terms should be agreed upon before the project begins, not added as a surprise on the invoice.