What are invoice payment terms?
Invoice payment terms explained — common types and how to choose them
Short answer
Invoice payment terms are the conditions you set on an invoice that specify when payment is due, what payment methods are accepted, and any penalties or discounts tied to timing. Clear payment terms reduce late payments because they remove ambiguity.
**Most common payment terms:**
| Term | Meaning | Best for | |---|---|---| | **Due on receipt** | Pay immediately | New clients, small jobs, retail | | **Net 7** | Due in 7 days | Freelancers, low-trust situations | | **Net 15** | Due in 15 days | Professional services, short projects | | **Net 30** | Due in 30 days | Standard B2B, established relationships | | **Net 60 / 90** | Due in 60 or 90 days | Manufacturing, government, large enterprise | | **2/10 Net 30** | 2% discount if paid in 10 days, else due in 30 | Incentivizing early payment | | **50% upfront** | Half before work begins | New clients, custom projects | | **COD** | Cash on delivery | Physical goods delivery |
**What to state on every invoice:** 1. Payment due date (specific date, not just "Net 30") 2. Accepted payment methods (bank transfer, credit card, check) 3. Late fee: "A late fee of [X]% per month applies to balances unpaid after [date]." 4. Early payment discount if offered
**How clear terms reduce late payments:** Invoices with a specific due date (e.g., "Due by May 15, 2026") are paid 25–30% faster than invoices that say only "Net 30," because the client must mentally calculate the due date. Printing the dollar amount of the late fee — not just the percentage — also accelerates payment.
**Setting terms by client type:** - New client, unknown creditworthiness: 50% upfront or Net 7 - Returning client, good history: Net 30 - Large enterprise: expect Net 60–90; price your services to account for carrying cost