Invoice Payment Terms Explained: Net 30, Due on Receipt and More

Updated October 4, 2026 · General information, not legal or tax advice.

Payment terms tell your client when an invoice must be paid and on what conditions. This guide lists every common term in one table, with the due date each one produces, the wording to put on the invoice, and how to choose terms that get you paid on time. For how clients pay (bank transfer, card, PayPal), see choosing payment methods.

Payment terms at a glance

Due dates below are for an invoice dated 1 October 2026. "Net" means the full invoice amount, with no discount.

Unless your agreement says "business days", "net" periods are counted in calendar days from the invoice date. Some contracts count from the date the client receives the invoice or the goods instead, which is why it is safest to print the actual due date on every invoice.

Due-date calculator

Each term explained

Due upon receipt

The client should pay as soon as they get the invoice. It is the fastest term but also the vaguest, because there is no fixed date after which the invoice is late. It suits one-off jobs, household customers and small amounts. If you use it, add a concrete date ("Due upon receipt – please pay by 8 October 2026"). Full details: what Due upon receipt means.

Net 7, Net 10 and Net 15

Short terms for small businesses, freelancers and new clients. They give the client time to approve and schedule the payment without leaving you waiting a month.

Net 30

The most common business-to-business term: the full amount is due 30 days after the invoice date. Larger companies often pay suppliers in a weekly or monthly payment run, so Net 30 fits their process. See Net 30 payment terms for variants such as "30 days from receipt of invoice" and the legal defaults in the US, UK and EU.

Net 45, Net 60 and Net 90

Long terms are usually imposed by large customers, retailers and some public bodies rather than offered by small suppliers. Before you accept them, work out whether you can fund the work for two or three months. In the EU, business-to-business terms longer than 60 days must be expressly agreed and must not be grossly unfair to the supplier (Late Payment Directive 2011/7/EU).

EOM, Net 30 EOM and MFI

Month-based terms align invoices with the client's monthly accounting cycle. "EOM" means due at the end of the invoice month; "Net 30 EOM" means 30 days after that month ends; "21 MFI" means the 21st of the month following the invoice. Because their meaning varies slightly between industries, always write out the resulting date.

2/10 Net 30 (early-payment discount)

The client may deduct 2% if they pay within 10 days; otherwise the full amount is due in 30. It speeds up payment but is expensive for you: giving up 2% to be paid 20 days earlier is equivalent to an annual rate of about 37% (2/98 × 365/20). Offer it only if faster cash is worth that much to you.

Payment in advance, COD and deposits

Cash in advance (CIA or PIA) removes payment risk entirely and suits custom orders and first-time customers. Cash on delivery (COD) collects payment when goods arrive. For projects, a deposit followed by a final payment, or a series of milestone invoices, spreads the risk between both sides. To bill a deposit from a quote, see how to turn a quote into an invoice.

Retainage

Common in construction: the client holds back a percentage of each progress payment until the job is finished and accepted. Show the full amount earned, subtract the retainage, and invoice the retained amount separately at completion.

Wording to copy onto your invoice

Late-fee rates are limited by law in many places (US states set different caps; in the UK, businesses can claim statutory interest of 8% above the Bank of England base rate on late business-to-business payments). Agree any fee in writing before the work starts. See handling late payments.

How to choose your terms

Start from your cash flow

If you pay for materials, subcontractors or your own time before the client pays you, shorter terms or a deposit matter more than looking flexible. If you can comfortably wait, Net 30 is the default most business clients expect.

Match the client

• Consumers and household customers: Due upon receipt, or payment on completion.
• Small businesses: Net 7 to Net 15.
• Larger companies: Net 30, sometimes Net 45 or 60 by their policy; ask for the purchase order number up front.
• Government: US federal agencies generally pay within 30 days of receiving a proper invoice under the Prompt Payment Act, with interest owed if they are late.
• New or slow-paying clients: a deposit or payment in advance.

Match the size of the job

• Small one-off jobs: Due upon receipt.
• Medium projects: a deposit (30–50%) and the balance Net 7 or Net 15 after delivery.
• Large or long projects: milestone or progress billing.

Typical terms by business type

Making the terms stick

1. Agree terms before the work starts. Put them in the quote, proposal or contract, then repeat them on every invoice.
2. Print the due date, not only the term. "Due 31 October 2026 (Net 30)" removes any argument about when the clock started.
3. Send the invoice promptly. The term starts when you invoice; a week's delay in sending is a week's delay in payment. See how to send an invoice.
4. Remind on a schedule. A short note on the due date and a firmer one a week later collect most late invoices. Our invoice email templates include the wording.
5. Apply what you agreed. If your terms include a late fee, apply it consistently; if they include a stop-work clause, use it.

Frequently asked questions