Invoice payment terms explained: Net 30, Net 60, due on receipt and more

Payment terms say when and how a client pays you. Here's what the common shorthand means (Net 15, Net 30, Net 60, due on receipt, EOM, 2/10 net 30), with worked due dates, how deposits, milestones and early-payment discounts work, what the law says about late fees in a few places, how to write the terms line on an invoice, and wording you can copy.

The legal rules mentioned (default payment periods, statutory interest and fixed sums in the UK and the EU, New York and Illinois freelance laws, and two Canadian rules) were checked against official pages on 2026-10-13. What the shorthand means is common business usage, not something those pages define. Not written by a lawyer.

The short answer

• Net 30 usually means the invoice is due 30 days after the invoice date; Net 15 and Net 60 work the same way. Due on receipt means pay now. These are shorthand, so print the actual due date on every invoice.
• Agree the terms before you start (in the quote, proposal or contract), then repeat them on each invoice. Terms printed for the first time on an invoice are harder to rely on.
• If you agree no date, the law may set one. For example, GOV.UK says a UK customer must pay within 30 days of getting your invoice or the goods or service unless you agree a payment date (GOV.UK), and New York City and Illinois freelance laws set a default of 30 days after you complete the work (NYC DCWP; Illinois DOL).
• Deposits and milestones cut what's at risk on bigger jobs; early-payment discounts such as 2/10 net 30 get you paid sooner but cost more than they look.
• Late fees need to be agreed in advance in most places, except where a law gives you interest anyway (the UK and EU do, for business clients).

1. What payment terms are, and where they go

Payment terms are the part of your agreement about money: when each payment is due, how much up front, how to pay, and what happens if it's late. They belong in the document the client accepts before you start (see our guide to writing a proposal and the quote generator), and again on each invoice.

Some places say what an invoice must show. GOV.UK, for example, lists "when the customer must pay you" among the information an invoice must include (GOV.UK: Invoicing and taking payment from customers), and says "You can set your own payment terms, such as discounts for early payment and payment upfront" (GOV.UK: Payment obligations). In Canada, the CRA lists the terms of payment among what a GST/HST invoice must show above a certain amount (our GST/HST invoice checklist has the details).

2. Common payment terms and what they mean

The meanings below are how these terms are commonly used in business; they're shorthand, not definitions from the official pages we read, and clients sometimes read them differently (for example counting from the day they received the invoice). The last column shows the due date for a made-up invoice dated Tue 10 March 2026.

"Days" in these terms normally means calendar days, not business days. Notice that Net 60 lands on a Saturday here: if you care when a weekend or holiday due date is paid, print the date you mean. Our invoice generator and invoice template work the due date out from the terms for you.

3. Net 30, Net 15 or Net 60: where the law sets limits and defaults

A shorter term gets you paid sooner; a longer one means you're lending the client money for longer. Big organisations often pay on a fixed cycle and may insist on their own terms; small clients often pay sooner if asked. Where you and the client haven't agreed a date, or agree a very long one, the law where you work may step in. A few official examples, read on 2026-10-13:

These are examples, not a full list. We haven't checked other US states, Canadian provinces or other countries for this page; our guide to getting paid on time in Canada covers the Canadian side. Consumer clients (people buying for themselves) often have extra rights; check your local consumer rules if you work for individuals.

4. Due on receipt and end of month (EOM)

• Due on receipt suits small one-off jobs and new clients. It doesn't make anyone pay faster on its own: many accounts teams batch payments, so ask how often they pay and who approves invoices.
• EOM lines your invoices up with a client's monthly payment run. "Net 30 EOM" usually means 30 days after the end of the invoice's month, so an invoice dated early in the month can wait almost two months: in the table above, Tue 10 March 2026 becomes Thu 30 April 2026.
• Whichever you use, put the due date itself on the invoice, and a purchase order (PO) or supplier number if the client uses one. A missing PO number is a common reason an invoice sits unpaid.

5. Deposits, upfront and milestone payments

For bigger or longer jobs, splitting the fee lowers what you risk on one client and shows early whether they pay at all. Two common patterns, with a made-up fee of 1,000 (any currency):

• Say whether the deposit is refundable if the project is cancelled, and that it's credited to the final invoice.
• Define each milestone by something both sides can see (a draft delivered, a page live), not by a date alone.
• Give each milestone invoice its own due date and say whether work pauses while one is overdue.
• Sales tax on deposits can have its own timing rules. In Canada, see the deposits note in our getting-paid guide; elsewhere, ask your accountant.

6. Early-payment discounts (2/10 net 30)

"2/10 net 30" is the usual shorthand for 2% off if the client pays within 10 days, otherwise the full amount within 30 days. On our made-up 1,000 invoice dated Tue 10 March 2026, the client could pay 980 by Fri 20 March 2026, or 1,000 by Thu 9 April 2026. GOV.UK names discounts for early payment as one of the terms you can set (GOV.UK).

• It's expensive money. Giving up 2% to be paid 20 days sooner works out to about 37% a year (simple: 2 ÷ 98 × 365 ÷ 20). Worth it only if cash now matters a lot to you; a deposit is often a cheaper way to get money sooner.
• Spell it out on the invoice: the discounted amount and the date it applies until, as well as the full amount and the due date.
• Sales tax. The CRA says that if you offer an early-payment discount on credit sales, you charge the GST/HST on the full invoice amount even if the customer takes the discount (or on the invoiced amount, if it's already net of the discount). Its example, in Manitoba: a $100 price plus 5% GST of $5, a 2% discount for paying within 10 days, so the customer pays $103 (CRA: GST/HST in special cases, Early-payment discounts). We haven't checked how VAT or US sales taxes treat early-payment discounts; ask your accountant.

7. Late fees and interest

A late fee or interest charge is easiest to rely on when the client agreed to it before the work started. Some places also give business suppliers interest by law:

• United Kingdom. GOV.UK says "You have the right to charge interest for late payment, but you can choose not to" (GOV.UK). On a late payment from another business, statutory interest is 8% plus the Bank of England base rate, and you can't claim it if your contract sets a different rate (GOV.UK: Interest on late commercial payments). You can also claim a fixed sum once per payment: £40 on a debt under £1,000, £70 from £1,000 to under £10,000, £100 from £10,000 (GOV.UK: Claim debt recovery costs). Our UK late payment interest calculator works it out.
• European Union. The directive's statutory interest is simple interest at the reference rate plus at least 8 percentage points, and the supplier can claim a fixed sum of at least €40 for recovery costs (Directive 2011/7/EU, Arts. 2 and 6). Each country sets the detail in its own law.
• Canada. Outside construction, none of the federal or provincial sources our Canadian guide checked adds interest to a late business invoice the way the UK's law does, so it comes down to what the client agreed. If a written contract states interest per month (or any period under a year) without stating the yearly equivalent, the Interest Act says no more than 5% a year is chargeable, payable or recoverable (Interest Act, s. 4). So write a monthly rate with its yearly equivalent. Our Canadian getting-paid guide covers this, the criminal interest rate and GST/HST on late charges.
• United States. We haven't checked state rules on late fees or interest for this page. The New York City, New York State and Illinois freelance laws above deal with written contracts and payment dates; for late fees, check your state's official pages or ask a lawyer.

Wherever you are: say whether interest is simple or compounded, give the rate per month and per year, start it from the due date, and put any late charge on a separate line or a new invoice.

8. How to write the terms on an invoice

Keep the terms near the total, where the client's accounts team looks. The essentials:

Invoice number: [number]
Invoice date: [date]
Payment terms: Net [number] (due [number] days after the invoice date)
Due date: [day, date month year]
Late payment: [the late-payment terms the client agreed to, or delete this line]
How to pay: [bank details / payment link]. Reference: [invoice number]

Filled in for our made-up invoice, the terms and due-date lines would read "Payment terms: Net 30 (due 30 days after the invoice date)" and "Due date: Thu 9 April 2026". Write the date out in words or as day month year, so clients in other countries can't misread it.

9. Payment terms wording you can copy

Paste this into your quote, proposal or contract, replace everything in [brackets], and delete the (optional) lines you don't use. Check the late-payment line against the rules where you and the client are (section 7).

Payment terms
- Invoices are due [number] days after the invoice date ("Net [number]"). The due date is printed on each invoice.
- (optional) Deposit: [percentage]% of the project fee, invoiced when you accept and due before work starts. It is credited to the final invoice and is [refundable / not refundable] if the project is cancelled.
- (optional) Milestones: [percentage]% on [milestone], [percentage]% on [milestone] and the rest on final delivery. Each milestone invoice is due [number] days after its invoice date.
- (optional) Early payment: [percentage]% off the invoice total if paid in full within [number] days of the invoice date.
- Late payment: [your late-payment terms, where the law allows them, e.g. simple interest at [rate]% per month ([yearly rate]% per year) from the due date until paid].
- (optional) If an invoice is more than [number] days overdue, I may pause work until it is paid.
- Prices are in [currency] and [include / exclude] [sales tax / VAT / GST/HST].
- How to pay: [bank transfer / card link / other]. Please include the invoice number.

10. Choosing your terms

• Your cash flow: how long can you wait between doing the work and being paid?
• The client: a new client, a small business, or a large organisation with a fixed payment cycle and its own supplier terms?
• The job: one short task (due on receipt or a short Net term), or weeks of work (a deposit and milestones)?
• The law: any maximum or default payment period where you or the client are (section 3).
• Late payment: what you'll charge, how you'll remind, and when you'll pause work. Our reminder emails work in any country.
• Your rate: longer terms and slow payers have a cost; the hourly rate calculator helps you leave room for it.

Free tools and kits

• Free invoice generator: pick due on receipt or a Net term and it prints the due date, in any currency (runs in your browser; nothing is saved).
• Free freelance invoice template (.xlsx): the due date is worked out from the terms you type.
• Free quote and estimate generator: a deposit and a valid-until date, so the terms are agreed up front.
• Free receipt generator: for when the client pays, in full or in part.
• Our paid Freelance Billing Kit by Small Rows (US$12, one-time) keeps each client's payment terms in its client list, gives every invoice a due date from those terms, and shows what's paid, part paid, open or overdue (with days overdue) in any currency. It doesn't chase clients or decide which terms are enforceable.
• With the quote and proposal and client tracker kits too: the All-Kits Bundle by Small Rows (US$24, one-time).

Where the sources differ

We read the pages under Sources on 2026-10-13. A few details to watch:

• Which day the clock starts. GOV.UK counts the UK default from when the customer gets your invoice or the goods or service; the EU directive from receipt of the invoice; New York City and Illinois from when you complete the work. Commercial "Net" terms usually count from the invoice date. Print the date to avoid the argument.
• "Usually" versus "shall not exceed". GOV.UK says an agreed business payment date must usually be within 60 days; the EU directive says 60 calendar days unless expressly agreed and not grossly unfair. Both are about business clients.
• Old but current pages. GOV.UK's invoicing guide was last updated in 2015 and is still the current guide on the check date; the CRA page was last modified on 2026-06-18.
• The EU directive is addressed to the member states. We read the 16 February 2011 directive text only, not each country's law or any later EU proposal.

When to get legal advice

• a client sends their own supplier terms with long payment periods, set-off rights or penalties you don't understand;
• you want to charge a late fee or interest that's more than a small, clearly agreed rate;
• you and the client are in different countries and it's unclear whose law applies;
• a client hasn't paid and you're thinking about a claim (see our Canadian and UK late-payment guides).

Related free resources

• How to write a freelance proposal: where the payment terms first appear.
• Scope creep and change requests: pricing, approving and invoicing extra work with a change order.
• Freelance deposits and retainers explained: deposit vs retainer, how to invoice and credit a deposit, refundability, GST/HST and UK VAT notes.
• Free invoice generator and invoice template.
• Getting paid on time as a freelancer in Canada: late fees, reminder emails and a late-payment interest calculator.
• UK late payment interest calculator: statutory interest and fixed sums on a late invoice to a UK business.
• All free tools.

Sources

Official pages read on 2026-10-13 (the GOV.UK interest and fixed-sum pages on 2026-10-10 and the Interest Act on 2026-10-08, for our earlier late-payment guides). Check the live page before you rely on it.

• United Kingdom: GOV.UK: Invoicing and taking payment from customers · GOV.UK: Payment obligations · GOV.UK: Late commercial payments · GOV.UK: Interest on late commercial payments · GOV.UK: Claim debt recovery costs
• European Union: Directive 2011/7/EU on combating late payment in commercial transactions (EUR-Lex)
• New York: NYC DCWP: Freelance workers · NY DOL: Freelance Isn't Free Act
• Illinois: Illinois DOL: Freelance Worker Protection Act
• Canada: CRA: GST/HST in special cases · Interest Act (Justice Laws)

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