Invoice Payment Terms Explained: Net 30, Net 60, Due on Receipt & More

What Are Invoice Payment Terms?

Invoice payment terms are the conditions under which you expect to be paid. They appear on every invoice and tell your client exactly when payment is due, how they should pay, and what happens if they're late.

Choosing the right payment terms is one of the most underrated decisions in running a small business. The wrong terms can leave you waiting 60 days for money you need today.

The Most Common Invoice Payment Terms

Net 30

Payment is due within 30 days of the invoice date. This is the most widely used term in B2B transactions. It gives clients enough time to process invoices through their accounts payable department without giving them so long that they forget.

Best for: Established clients you trust, government and corporate clients.

Net 60

Payment is due within 60 days. Often requested by larger businesses with slower payment cycles.

Best for: Large corporate buyers who insist on extended terms. Always try to negotiate down if possible — the longer the term, the more you're effectively financing your client's business.

Net 7 / Net 14

Payment due within 7 or 14 days. Rarely used in corporate settings but common for freelancers, sole traders, and smaller B2B transactions.

Best for: Freelancers, one-off projects, smaller amounts, newer clients.

Due on Receipt (DOR)

Payment is expected immediately upon receiving the invoice. Common for retail, services delivered in person (a market stall, a repair job), or clients with a history of late payment.

Best for: New clients, small or one-off jobs, any situation where you want to be paid on the day.

PIA (Payment in Advance)

The client pays before work begins. Standard in certain industries — custom manufacturing, creative projects, event planning.

Best for: High-risk projects, new clients, jobs that require significant upfront costs.

2/10 Net 30

The client gets a 2% discount if they pay within 10 days; otherwise full payment is due in 30 days. This incentivises early payment by making it financially attractive.

Best for: Businesses with strong cash flow that prefer early payment over full invoice value.

CIA (Cash in Advance) / COD (Cash on Delivery)

Full payment before or at the time of delivery. Eliminates credit risk entirely.

Best for: First-time clients in higher-risk markets, international orders, industries prone to payment disputes.

How Payment Terms Affect Your Cash Flow

The gap between when you do the work and when you get paid is one of the biggest cash flow challenges small businesses face.

If you invoice $10,000 in January on Net 60 terms, you might not see that money until March. If your supplier payments and payroll are due in February, you have a problem — even though your business is profitable on paper.

The simple fix: shorten your payment terms wherever clients will accept it. Switching from Net 30 to Net 14 for most clients can cut your average payment time almost in half.

Late Payment Clauses

Always include a late payment clause on your invoices. Something like: "Invoices unpaid after [due date] will accrue interest at 1.5% per month."

Even if you never enforce it, it signals that you take payment seriously and gives you a legal basis for charging interest if a client becomes a persistent late payer.

In many countries (including the UK under the Late Payment of Commercial Debts Act), you have a statutory right to charge interest on late invoices regardless of whether it's stated on your invoice.

Which Terms Should You Use?

For new clients: Start with shorter terms (Net 14, Due on Receipt, or 50% upfront). Extend terms once they prove reliable.

For regular clients: Net 30 is a reasonable standard. Push for Net 14 if your cash flow allows.

For large corporates: They often insist on Net 60 or even Net 90. If you accept this, factor it into your pricing — you're providing 60-90 days of free credit.

For small jobs under $500: Due on Receipt keeps things simple and avoids the administrative overhead of chasing small balances.

Setting Payment Terms in Quotation Expert

In Quotation Expert, you can set default payment terms in your business settings — they'll apply automatically to every new invoice. You can also override terms on individual invoices for clients that have negotiated different conditions.

Every invoice displays the due date prominently, making it clear to clients exactly when payment is expected. Overdue invoices are flagged automatically in your dashboard.