Payment Terms Explained: Net 15, Net 30 and Net 60

Payment terms are the deadline attached to your invoice. They look like small print, but they are one of the few levers you fully control over your own cash flow — and most people set them by copying whatever they saw on someone else’s invoice.

Here is what the standard terms mean and how to choose between them.

What “Net” actually means

“Net” means the full amount is due, with no deductions, within the stated number of days. So:

• Net 7 — payment due within 7 days.
• Net 15 — payment due within 15 days.
• Net 30 — payment due within 30 days.
• Net 60 — payment due within 60 days.
• Due on receipt — payment expected immediately.

The number counts calendar days, not business days, unless you have said otherwise in writing. Net 30 on an invoice issued 1 June is due 1 July, weekends and holidays included.

When does the clock start?

This is the ambiguity that causes most disputes. The countdown normally starts on the invoice date, but some clients operate on terms that start from a different event:

• From invoice date — the default, and what you should assume unless told otherwise.
• From receipt of invoice — the clock starts when it lands in their system, which can be days later.
• End of month (EOM) — “Net 30 EOM” means 30 days from the end of the month the invoice was issued in. An invoice dated 2 June is not due until 31 July.
• From delivery or acceptance — the clock starts when the work is signed off, not when it is billed.

Choosing your terms

Shorter terms are better for you, but only if the client will accept them. A rough guide:

• Due on receipt or Net 7 — small jobs, new clients, one-off work, or anything where you carried the cost of materials.
• Net 14 or Net 15 — the sweet spot for freelancers and small agencies. Fast enough to protect cash flow, standard enough that nobody objects.
• Net 30 — the default for business-to-business work and effectively mandatory with mid-size and larger companies.
• Net 60 or Net 90 — common with large corporates and public bodies. Only agree if the contract value justifies financing them for two months.

One thing to be realistic about: with a large organisation, your terms are frequently a negotiating position rather than a rule. Their accounts payable system may run on fixed payment cycles, and an invoice arriving the day after a cut-off waits for the next run regardless of what you wrote.

Early payment discounts

You will see terms written as 2/10 Net 30. This means: take 2% off if you pay within 10 days, otherwise the full amount is due in 30. The format is always discount / days then the net term.

Before offering one, work out what it costs. A 2% discount for paying 20 days early is, annualised, an interest rate above 36% — a very expensive way to borrow. It can still be worth it if you genuinely need the cash sooner or if it reliably converts slow payers, but it is not free money and it should not be a default.

Late payment terms

You can charge interest on overdue invoices, but only if the client agreed to it before the work started. State it in your contract and repeat it on the invoice — a line such as “Overdue accounts are subject to interest at 1.5% per month” is enough.

Many countries also give suppliers a statutory right to late-payment interest and recovery costs even without a contract clause, though the rate and rules vary. In practice the clause matters less as a revenue source than as a signal that you track your invoices. If an invoice does go past due, how to write a late payment reminder has wording you can send.

Making your terms work

Terms only function if they are unambiguous and visible. Four habits do most of the work:

1. Agree terms before you start. Put them in the proposal or contract, not just on the invoice. An invoice is a poor place to introduce a rule for the first time.
2. Show a calendar due date on the invoice, prominently.
3. Invoice immediately. Net 30 from today beats Net 15 from three weeks from now.
4. Ask about their process. Whether they need a PO number and when their payment runs happen tells you more about when you will be paid than your terms do.

Invora’s free invoice generator lets you set an issue date and a due date directly, so the real date is always printed on the document. For more on reducing delays before they happen, read how to get clients to pay on time.