What payment terms should you put on an invoice?
Adrian Simpson has been setting and chasing payment terms across 20+ years of running small web and IT businesses. First posted 2 August 2026, touched up 14 August 2026.
Payment terms are the difference between getting paid in a week and chasing someone for two months. Most of it comes down to picking a term that fits the client and writing it so plainly that nobody has to interpret it.
What "Net 30" actually means
Net means the full amount with nothing deducted. The number is how many days the client has to pay it. So Net 30 reads as "pay the whole invoice within 30 days."
Thirty days from when, though? That's where the arguments start. Unless you say otherwise, the clock runs from the invoice date. Some clients count from the day the work landed, others from the day their accounts team opened the email, and a few will count from whenever it suits them. Writing the real due date on the invoice ends that conversation before it happens.
The terms you'll actually use
Picking one
Rough rule: the smaller the client, the shorter the term. A sole trader can pay you this week. A company with a purchase order system genuinely can't.
New client on a small job, ask for payment on receipt or take a deposit. Regular client you trust, Net 14 gets you paid without anyone feeling squeezed. Company with an accounts department, use Net 30, because anything shorter gets quietly normalised to 30 by their system anyway. Client asking for Net 60, that's fine, just don't quote them the same price as everyone else.
Early payment discounts
"2/10 Net 30" means take 2% off if you pay inside 10 days, otherwise the full amount is due at 30. You'll see it on supplier invoices and it's worth knowing what it costs you when you're the one offering it.
You're giving up 2% of the invoice to get paid 20 days sooner. Annualise that and it's roughly 37%. That's expensive money. It makes sense if cash is tight and the alternative is an overdraft or a card. It makes no sense as a standing offer on every invoice.
Worth checking. On a $5,000 invoice, a 2% early payment discount hands back $100 to save 20 days of waiting. If that $100 isn't buying you something specific, keep it.
Late fees
A late fee is what gives the due date teeth. Around 1.5% a month, which is 18% a year, is the common figure in the US and the UK.
Two things have to be true before you can lean on it. The client needs to have agreed to the fee before the work started, which means it belongs in your quote or contract and not just printed on the invoice afterwards. And it has to be legal where you are, because some places cap what you can charge and others set their own statutory rate for commercial debts. Check your local rules before you put a number in writing.
Deposits
For a new client, or any job where you're buying materials up front, take money before you start. Somewhere between 25% and 50% is normal and nobody serious will blink at it. A deposit filters out the clients who were never going to pay, and it covers you when a job stalls halfway through for reasons that have nothing to do with you.
What to actually write
Vague terms get ignored. Four lines cover almost every situation:
Payment due: 16 August 2026 (Net 14)
Late fee: 1.5% per month on overdue balances
Pay to: [bank details or payment link]
Putting the due date as a real date is the single biggest improvement most invoices can make. "Net 14" asks somebody to do arithmetic before they can act on it. "Payment due 16 August" doesn't. One of those gets paid sooner and it isn't the clever one.
When it goes past due
Send a short reminder the day after the due date, and keep it factual. Most late payments are admin, not malice. An invoice fell behind a desk, the person who approves it was away, the email went to a shared inbox nobody reads.
Put the invoice number, the amount, and the due date in every message so nobody has to go looking. If it's still unpaid at two weeks over, phone them. A call gets a straight answer out of someone in a way that a fourth email never will.
When it's still not paid
Past the first reminder and the phone call, you need a sequence you follow rather than a decision you make each time when you're annoyed. Escalate on a schedule and it stays professional, which keeps the relationship survivable if the cause turns out to be boring.
A reasonable ladder, counting from the due date: a short reminder at day one, a phone call at day fourteen, a formal notice at day thirty stating the amount, the days overdue, the late fee now applying, and a date by which you expect payment. At day forty-five, stop work on anything ongoing for that client and say why.
Stopping work is the step people skip, and it's usually the one that moves things. Continuing to deliver while unpaid tells the client the due date was decorative, and it grows the amount you're exposed to.
Past sixty days you're choosing between letting it go, a collections agency, or a small claims process. Small claims courts in most countries handle modest amounts without a lawyer, for a fee that's often recoverable. Collections agencies take a percentage, typically a large one, and effectively end the relationship. Both beat writing off a real debt because chasing felt uncomfortable.
Keep the paper. Every reminder, the signed quote, the delivery confirmation, and the invoice itself. If it ever goes formal, the case is mostly about whether you can show what was agreed and what was sent.
How they pay changes when they pay
The term on the invoice sets a deadline. The payment method decides how much friction sits between the decision to pay and the money arriving.
Bank transfer costs you nothing and suits larger invoices, but it needs somebody to actively do it, which means it waits for a payment run. A card or payment link costs 2% to 3% and gets paid faster, often immediately, because it takes one click from the email. On a small invoice that fee is usually worth it. On a $20,000 invoice it's $600 and it isn't.
Direct debit is the quiet winner for anything recurring. Once it's set up the money moves on schedule without anyone deciding again each month, which removes the single biggest cause of late payment: nobody got round to it.
Offering both a transfer option and a link covers most situations. Just put the processing cost in your pricing rather than discovering it later, and remember it comes out of margin, not out of cost. The margin guide shows how much of your profit a few percent actually represents.
Milestones instead of one big invoice
On a job running longer than a month, the terms matter less than when you invoice. A three-month project billed at the end on Net 30 means four months between starting work and seeing money, and you carry the costs the whole way.
Split it. A deposit to start, one or two payments tied to points along the way, and a balance on completion. Tie each one to something the client can see has happened rather than to a calendar date, so there's nothing to argue about.
It also limits the damage. If a client turns out not to pay, you find out after the first milestone rather than after three months of work.
Put it on the invoice
The invoice generator has fields for payment terms and notes, so you can set the due date and the late fee wording once and download the finished invoice as a PDF. If you're still at the quoting stage, start with the price quote calculator and carry the numbers over when the client says yes.
General guidance, not legal or financial advice. Late fees and payment terms are regulated differently everywhere, so check what's actually enforceable where you operate.