Payment terms explained: Net 30, Net 15, and more

Payment terms are the conditions you set for getting paid. At a minimum, they answer one question: by when is this invoice due? Often they also cover how the client can pay, whether there's a discount for paying early, and what happens if payment is late.

The most important thing to understand is that any term beyond "pay now" is a form of credit. When you send an invoice with Net 30, you've delivered the work and agreed to wait up to 30 days for the money. In effect, you're giving your client a short, interest-free loan. That's normal and often expected in business-to-business work, but it's worth seeing it for what it is so you can decide how much credit you actually want to extend.

Clear terms protect both sides. Your client knows exactly what's expected, and you have a documented date to point to if a payment slips. Vague terms like "payment due promptly" invite delay because there's no specific deadline to miss.

"Net" simply means the full invoice amount is due within a set number of days. The number is the count of days.

Net 15 means payment is due within 15 days. Net 30 means 30 days, Net 60 means 60 days, and Net 90 means 90 days. Net 30 is the most common term in B2B invoicing, which is why so many clients expect it by default.

One detail trips people up: the countdown usually starts on the invoice date, not the day the client opens the email or receives the goods. So an invoice dated March 1 with Net 30 terms is due March 31. If you want the clock to start on delivery or receipt instead, say so explicitly on the invoice. The same goes for what happens when a due date lands on a weekend or holiday, spell out whether you mean calendar days or business days so there's no argument later.

Shorter terms get you paid sooner but ask more of the client. Longer terms (Net 60, Net 90) are common with large companies and government buyers, who often won't accept anything shorter. Match the term to who you're dealing with.

Some terms ask for payment up front or right away.

Due on receipt means the client is expected to pay as soon as they get the invoice, with no grace period. It's useful for one-off jobs, new clients you haven't built trust with yet, or smaller amounts where a 30-day wait isn't worth it. Be aware that "immediately" still depends on the client's payment process, so building in a payment link helps turn intent into action.

CIA stands for cash in advance, sometimes written as PIA (payment in advance). The client pays the full amount before you start work or ship anything. This is the safest term for you because you carry no risk of non-payment, and it's common for custom work, first projects with an unknown client, or situations where you'd be out of pocket on materials.

A deposit or partial-advance arrangement sits in the middle: the client pays a percentage up front (often 25 to 50 percent) and the balance on completion or delivery. This is a practical compromise that protects your cash flow on larger projects without asking the client to pay everything before seeing results.

Not every term counts a fixed number of days from the invoice. Some align with the calendar month, which suits clients who process payments in monthly batches.

EOM means end of month: payment is due by the last day of the month the invoice was issued. So an invoice dated March 15 with EOM terms is due March 31. You'll sometimes see this combined with net days, like "Net 30 EOM," which means 30 days after the end of the invoice month.

MFI means month following invoice, often written with a day, such as "15 MFI." That means payment is due on the 15th of the month after the invoice date. An invoice dated March 20 with 15 MFI terms is due April 15.

These terms exist because many accounts-payable teams run payment cycles on set days each month. Aligning your invoice with their cycle can actually speed things up, since your bill lands in the batch they're already processing rather than waiting for the next one.

An early-payment discount rewards clients for paying ahead of the deadline. The shorthand looks cryptic but follows a simple pattern: discount percentage / days to earn it, then the normal net term.

2/10 Net 30 means: take 2 percent off if you pay within 10 days; otherwise the full amount is due in 30 days. 1/10 Net 30 would be a 1 percent discount for paying within 10 days. The structure is always the same once you know how to read it.

Discounts can pull cash in faster, but run the numbers before offering one. A 2 percent discount for paying 20 days early sounds small, yet annualized it's worth roughly 37 percent, calculated as (2 / 98) times (365 / 20). That's a steep effective rate to give away, so only offer early-payment discounts when faster cash is genuinely worth more to you than the margin you're surrendering. For many small businesses, simply making it effortless to pay on time works better than a standing discount.

There's no single "correct" term. The best choice depends on your cash flow, the size of the job, and who your client is. A few principles help.

Default to shorter where you can. If your work doesn't demand a long credit period, Net 15 or even due on receipt often gets you paid sooner without friction, especially for smaller invoices and ongoing services. Many small businesses find that asking for payment on receipt reduces their reliance on credit lines to cover the gap.

Match the term to the relationship. New or unproven clients are good candidates for deposits, cash in advance, or shorter terms. Established clients with a solid payment history can be trusted with Net 30. Large enterprise and government buyers will often dictate Net 60 or Net 90, and you'll usually have to accept it to win the work.

Make the terms specific and visible. Put the exact due date on the invoice, not just "Net 30." State accepted payment methods, and if you charge a late fee (commonly 1 to 2 percent per month in the US), spell it out in the agreement before you start, not after a payment goes late.

Reduce the friction of paying. The term on the page only matters if paying is easy. Offering a clickable payment link, accepting common methods, and sending the invoice promptly all shorten the gap between "due" and "paid." Late payments are common — a large share of small businesses are owed money on overdue invoices at any given time — so anything that removes a step or an excuse helps.

Good terms only work if you apply them consistently. That means sending invoices on time, with a clear due date, and following up the moment one slips, every time, not just when you remember.

That consistency is hard to keep up by hand, which is where invoicing software earns its place. The right tool lets you set default terms once, calculates the due date for you, adds a payment link so clients can pay in a couple of clicks, and chases overdue invoices automatically so you're not writing awkward reminder emails.

Platybooks is built around exactly this. You set your default payment terms, and new invoices inherit the right due date automatically. Clients pay through a hosted link, and the invoice marks itself paid. Overdue reminders go out on their own at set intervals, and a dashboard shows you what's outstanding and overdue at a glance. If chasing payments is eating your time, the fix is usually clearer terms plus automation that enforces them, so you can focus on the work instead of the follow-up.