Definition
Payment terms are the conditions on an invoice that state when and how the client must pay. They include the payment deadline (such as Net 30 or due on receipt), accepted payment methods, any early payment discount, and any late fee. Clear payment terms reduce disputes and speed up payment.
Payment terms in practice
Payment terms should be agreed before work starts and repeated on every invoice. The most common structure is a net term that counts days from the invoice date, but terms can also be tied to delivery, end of month, or milestones.
Shorter terms improve cash flow but may be resisted by large clients with fixed accounts payable cycles. Many freelancers use Net 15 for small clients and accept Net 30 for corporate ones.
Frequently Asked Questions
What are the most common payment terms?
Net 30 is the most common in business-to-business work, followed by Net 15, due on receipt, and Net 60 for large enterprises. Early payment discounts such as 2/10 Net 30 are also widely used.
Where do payment terms go on an invoice?
Near the total and due date, where the client will see them when deciding how to pay. Repeat any late fee or discount terms in the notes section so they are not missed.