What are payment terms on an invoice?
Payment terms on an invoice specify when the buyer is expected to pay, what payment methods are accepted, and what late fees apply if payment is not received by the due date. They are the conditions that govern the financial side of a transaction. Common terms include Net 30 (30 days to pay), Net 15 (15 days), Due on Receipt (immediate), and 2/10 Net 30 (2% discount if paid within 10 days, full amount due by day 30).
What payment terms should freelancers use?
Most freelancers benefit most from Net 7 or Net 15 for standard projects. Due on Receipt works well for small transactions and new clients. For larger projects, a 50% deposit upfront + balance on completion is the most protective structure. Net 30 is appropriate for established corporate clients with formal AP departments. Avoid Net 60 or Net 90 unless you have strong cash reserves.
How do I set payment terms on an invoice?
State your payment terms clearly in two places: your contract (the legal foundation) and every invoice (the payment reminder). On an invoice, include the payment terms label (e.g., Net 15), the specific due date (e.g., 'Due: May 11, 2026'), your accepted payment methods with direct links or bank details, and your late fee policy. Specific due dates outperform relative terms — 'Due May 11' creates more urgency than 'Net 30.'
What happens if a client doesn't pay within the payment terms?
If a client misses the payment due date, the invoice becomes overdue. You can apply late fees per your stated policy, send a dunning sequence of escalating reminder emails, pause work on the project until payment is received, or ultimately refer the matter to a collections agency or small claims court. The key is to have your late fee policy stated clearly on the original invoice — you cannot add it retroactively.
What is a 2/10 Net 30 payment term?
2/10 Net 30 is an early-pay discount offer where the client receives a 2% discount if they pay within 10 days of the invoice date; otherwise, the full amount is due within 30 days. For example, on a $5,000 invoice, paying within 10 days saves the client $100. This structure incentivizes faster payment and is commonly used in B2B transactions.
Can I change payment terms after the contract is signed?
Changing payment terms mid-project requires a formal written amendment to the original agreement signed by both parties. You cannot unilaterally alter agreed payment terms without the client's consent. For future projects, you can update your standard terms. If you want to negotiate shorter terms with an existing client, frame it as a business discussion about cash flow management and offer something in return (e.g., a small discount for faster payment).