Getting paid
Invoice payment terms explained
What Net 30, EOM, and 2/10 Net 30 actually mean, how late fees work, and how to pick terms that suit your cash flow and your clients.
Key takeaways
- Payment terms set when an invoice is due and what happens if it's late.
- Shorter terms help cash flow, but they need to match what your clients can realistically meet.
- Agree on terms before work starts, then repeat them on every invoice with a calendar due date.
- Late fees and early-payment discounts can work, but check local rules on what you may charge.
Payment terms tell a client exactly when an invoice is due and what happens if it isn't paid on time. They're usually a short line near the bottom of the invoice, such as "Net 30" or "Due on receipt," but they have a direct effect on how quickly money reaches your account.
This guide explains the most common terms, what they mean in practice, and how to choose the right ones for your business and your clients.
Common payment terms at a glance
| Term | What it means | Invoice dated June 3 is due | Often used for |
|---|---|---|---|
| Due on receipt | Payment is expected as soon as the invoice arrives | June 3 | Small one-off jobs, consumer work |
| Net 7 | Due 7 days after the invoice date | June 10 | Freelancers, short engagements |
| Net 15 | Due 15 days after the invoice date | June 18 | Small businesses, ongoing services |
| Net 30 | Due 30 days after the invoice date | July 3 | B2B work, agencies, wholesale |
| Net 60 | Due 60 days after the invoice date | August 2 | Large companies with fixed payment cycles |
| EOM | Due at the end of the month the invoice is issued | June 30 | Clients who pay in monthly batches |
| 2/10 Net 30 | 2% off if paid within 10 days; otherwise due in 30 | June 13 with discount, July 3 in full | Sellers who want faster payment |
How each term works
Due on receipt
The client should pay as soon as they receive the invoice. It's simple and fast, but some clients read it as "whenever," because there's no date attached. If you use it, still write one: "Due on receipt (June 3, 2026)."
Net 7, Net 15, Net 30, and Net 60
"Net" refers to the full amount, and the number is how many days the client has to pay, counted from the invoice date. Net 30 is common in business-to-business work, partly because many companies process supplier payments on a monthly cycle. Net 60 and longer usually come from large clients with fixed payment policies. You may not be able to negotiate those, but you can account for them in your pricing and cash planning.
End of month (EOM)
Payment is due at the end of the month in which the invoice was issued. Variations exist: "Net 15 EOM" usually means 15 days after the end of that month. Because the phrasing isn't always read the same way, spell out the date on the invoice.
2/10 Net 30
This is an early-payment discount. The client may deduct 2% if they pay within 10 days; otherwise, the full amount is due in 30. On a $5,000 invoice, paying early saves the client $100. That $100 comes out of your revenue, so offer the discount only if getting paid three weeks sooner is worth more to you than the 2%.
Payment in advance and split terms
Some businesses require full or partial payment before work begins, often written as PIA (payment in advance) or CIA (cash in advance). Split terms are a middle ground, for example: "50% due on signing, balance due Net 15 after delivery." They suit custom work, first-time clients, and jobs with significant upfront costs, such as materials ordered specifically for the project.
Late fees and interest
A late fee gives clients a reason to prioritize your invoice. Common approaches are a flat fee per overdue invoice, such as $25, or a monthly percentage of the overdue balance.
- Agree on it first. Put the late fee in your contract or accepted estimate, not only on the invoice.
- State it plainly. For example: "A late fee of 1.5% per month applies to balances unpaid after the due date."
- Check the rules. Many states and countries limit how much interest or fees you can charge, and some treat consumer and business clients differently. Confirm with an accountant or attorney before setting a rate.
- Apply it consistently. A fee you never enforce stops meaning anything. If you waive it, do so deliberately and tell the client.
To put a typical fee in perspective: on a $2,000 invoice, a 1.5% monthly fee adds $30 for each month it's overdue. The amount is modest. Its real value is that it gives your invoice a reason to be paid ahead of ones that carry no fee.
How to choose the right terms
There's no single correct answer. The right terms balance your cash flow against how your clients are set up to pay. Work through these questions:
- How long can you wait? If rent or payroll depends on this payment, shorter terms such as Net 7 or Net 15 make sense.
- Who is the client? Individuals and small businesses can often pay quickly. Larger companies may have fixed cycles of Net 30 or longer.
- How large is the invoice? For big invoices, consider a deposit or milestone billing rather than one long wait for the full amount.
- What's normal in your industry? Terms far outside the norm can create friction. Terms slightly shorter than the norm rarely do.
Once you've decided, agree on terms before work begins, in the contract or the estimate the client approves. Keep them consistent across invoices for the same client, so nobody has to check which rules apply this time.
Whatever you choose, word it so it can't be misread. A few examples:
- "Payment due within 15 days of the invoice date (by June 18, 2026)."
- "Deposit of $1,200 due before work begins; balance due Net 15 from delivery."
- "Payment due by the last day of the month of issue (June 30, 2026)."
Putting your terms to work
Clear terms set expectations. Reminders and easy payment options help clients meet them. Schedule automatic payment reminders around your due dates, and read how to get paid faster for more tactics. When you're ready, add your terms and a calendar due date to your next invoice with the free invoice generator.