Invoice Payment Terms: Net 15, Net 30, Net 60 Explained

Payment terms define when your client must pay and set expectations for both sides. Clear terms reduce late payments and avoid awkward follow-ups. The most common options are Net 15, Net 30, and Net 60, but the right choice depends on your industry, cash flow, and client relationship.

Below is a practical guide to help you pick the best terms and protect your revenue.

What Does "Net" Mean?

"Net" indicates the number of days after the invoice date when payment is due. For example, Net 30 means the invoice must be paid 30 calendar days after the invoice date. This definition is widely used in accounting and finance¹.

Common Net Terms

• Net 15: Payment due 15 days after the invoice date
• Net 30: Payment due 30 days after the invoice date
• Net 60: Payment due 60 days after the invoice date

In many industries, Net 30 is the default, while larger companies may request Net 60 or longer to manage cash flow².

"Due on Receipt" vs Net Terms

Some invoices are due on receipt, meaning payment is expected immediately. This works well when:

• The project is small or low risk
• You have little history with the client
• You need to protect cash flow

However, many B2B clients prefer net terms, especially if they process payments on scheduled cycles. The U.S. Small Business Administration recommends clear payment expectations in contracts and invoices to avoid disputes³.

How to Choose the Right Payment Terms

Use these factors to decide whether to use Net 15, 30, or 60:

1. Cash Flow Needs

If your business relies on fast cash flow (freelancers, small agencies), Net 15 or due on receipt is safer. Longer terms can create cash gaps and force you to use credit.

2. Client Size and Industry

Larger companies often have slower payment cycles. If you want to work with enterprise clients, expect to negotiate Net 45 or Net 60.

3. Project Risk

For first-time clients or high-value projects, consider:

• 50% upfront + Net 15 on delivery
• Milestone invoicing to reduce risk

4. Competitive Norms

Check what is standard in your industry. If competitors offer Net 30, using Net 15 may feel strict unless you provide extra value.

Example: Net 30 Payment Timeline

If you send an invoice on March 1 with Net 30 terms:

• Payment is due March 31
• You should follow up if unpaid by April 1

Always include the exact due date on the invoice to avoid confusion.

Adding Late Fees and Incentives

Late Fees

Late fees encourage timely payment, but they must be reasonable and clearly stated. A common approach is 1% to 1.5% per month on overdue balances⁴. Always confirm that your local laws allow late fees.

Early Payment Discounts

To speed up payment, you can offer discounts such as 2/10 Net 30, meaning the client gets a 2% discount if they pay within 10 days, otherwise the full amount is due in 30 days¹.

Best Practices for Faster Payments

• Send invoices immediately after delivery or milestone completion
• Include a clear due date, not just net terms
• Offer online payment options (card, bank transfer, ACH)
• Set reminders a few days before the due date
• Follow up promptly on late payments

These steps are standard recommendations in small business invoicing guides³.

Sample Payment Terms Wording

Use short, clear language on your invoice:

Payment terms: Net 30. Payment is due by April 30, 2026. Late payments may incur a 1.5% monthly fee.

This removes ambiguity and protects your business.

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Sources and References

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Last updated: January 9, 2026

This article provides general business information and is not legal or tax advice.

Footnotes

1. Investopedia (2024). Net 30 Definition. ↩ ↩²

2. QuickBooks (2024). Net 30, Net 60, Net 90: What Do They Mean?. ↩

3. U.S. Small Business Administration (2024). Invoice, billing, and payments. ↩ ↩²

4. FreshBooks (2024). How To Charge Late Fees on an Invoice. ↩