Invoice Payment Terms Explained: Net 30, Due on Receipt & More
Payment terms tell your client when they need to pay. Using the right terms can mean the difference between getting paid in 7 days or waiting 90. Here's everything you need to know.
Common Invoice Payment Terms
Due on Receipt
Payment is expected immediately upon receiving the invoice.
Best for: One-time clients, small amounts, or when you need cash flow urgently.
0-3 days
Net 7
Payment is due within 7 calendar days of the invoice date.
Best for: Freelancers and service providers who want quick turnaround.
5-7 days
Net 14
Payment is due within 14 calendar days of the invoice date.
Best for: The sweet spot for most small businesses. Professional but prompt.
10-14 days
Net 30
Payment is due within 30 calendar days. The most common term in business.
Best for: Established relationships with reliable clients. Standard for B2B.
25-35 days
Net 60 / Net 90
Payment is due within 60 or 90 days. Extended terms for large organisations.
Best for: Enterprise clients and government contracts. Only if your cash flow can handle it.
55-95 days
2/10 Net 30
2% discount if paid within 10 days; otherwise, full amount due in 30 days.
Best for: Encouraging early payment. The discount motivates clients to pay sooner.
8-12 days (with discount)
50% Upfront
Half the total is due before work begins; the balance upon completion.
Best for: Large projects, new clients, or when you need to cover material costs.
Varies
End of Month (EOM)
Payment is due at the end of the month in which the invoice is received.
Best for: Clients who process payments in monthly batch cycles.
15-30 days
Which Payment Terms Should You Use?
The best payment terms depend on your business type, client relationship, and cash flow needs:
- Freelancers and solopreneurs — Use Net 7 or Net 14. You can't afford to wait 30+ days for every payment. For new clients, use Due on Receipt or request a deposit.
- Small businesses — Net 14 or Net 30 works well for established client relationships. Offer early payment discounts (2/10 Net 30) to incentivise faster payment.
- Large projects — Use milestone billing with 50% upfront. This protects your cash flow and reduces risk on both sides.
- Corporate clients — Many large companies default to Net 30 or Net 60. You may need to accept these terms but negotiate where possible.
How to Handle Late Payments
Include a late payment clause in your invoice terms. Common approaches:
- Interest charges — "Interest of 2% per month will be charged on overdue amounts"
- Late fees — "A flat fee of R250 will be added to invoices unpaid after 14 days"
- Work suspension — "Services will be paused on accounts more than 30 days overdue"
The key is to state these terms before you start work, ideally in your contract or engagement letter. Don't surprise clients with penalties after the fact.
Tips to Get Paid Faster
- Invoice immediately — Don't wait. Send the invoice the day you deliver.
- Use shorter terms — Net 7 instead of Net 30 for new relationships.
- Add online payment — Clients who can pay by card or instant EFT pay faster.
- Send reminders — Automate reminders 3 days before due date, on due date, and 3 days after.
- Offer discounts for early payment — Even 1-2% motivates many clients.
- Follow up personally — A phone call or direct message is more effective than another email.
Setting Payment Terms in Illumi
Illumi lets you set default payment terms that automatically apply to every invoice. You can also override terms per client or per invoice. Automatic payment reminders are sent before and after the due date, so you never need to chase payments manually.