Payment terms sound like a formality, but they directly determine when money hits your account. The terms you set — and how clearly you communicate them — affect your cash flow more than you might expect.
What “Net” means
Net [number] means the full invoice amount (the “net” total) is due within that many calendar days of the invoice date.
- Net 7: Payment due in 7 days
- Net 14: Payment due in 14 days
- Net 30: Payment due in 30 days
- Net 60: Payment due in 60 days
Calendar days, not business days, unless you specify otherwise. An invoice dated May 1 with Net 30 terms is due June 1.
The term “due upon receipt” means the client should pay immediately — useful for very small projects or clients with a history of late payment, but unusual for larger engagements.
What term to use for different client types
Small businesses and startups: Net 14. They typically have the flexibility to pay within two weeks and don’t have corporate approval chains slowing things down. Net 30 gives them no urgency.
Mid-size companies: Net 14 or Net 30 depending on their accounts payable process. Ask your contact what their standard payment terms are before you quote — some companies have a default they apply to all vendors, and you’ll be fighting upstream if yours is shorter.
Large corporations: Net 30 is typically their standard, and some default to Net 45 or Net 60. You can negotiate Net 30 even with companies that prefer Net 45, but it may require sign-off from their procurement team. Decide whether it’s worth the conversation for the project value.
Recurring monthly clients: Net 7 or Net 14 on monthly retainers works well. You’re billing for work that’s already been done; payment shouldn’t drag out a month.
The payment terms that actually get you paid faster
Terms alone don’t determine when you get paid. These do:
A specific due date, not just terms. Writing “Payment due: June 10, 2025” is clearer than “Net 14.” The client doesn’t have to calculate anything. When accounts payable sees a specific date, they schedule payment against it.
A payment link. An invoice with a “Pay Now” button gets paid faster than one that requires the client to go find their online banking. Reducing friction at the payment step is the single highest-leverage thing you can do.
Automated reminders. If you send a reminder 3 days before the due date and another on the due date, you intercept late payment before it happens rather than chasing it after. Waco3 sends these automatically based on the due date you set on the invoice.
A late fee clause. “Invoices unpaid after the due date are subject to a 1.5% monthly service charge” creates a financial incentive to pay on time. You don’t have to enforce it aggressively, but having it on the invoice changes behavior.
Common payment term mistakes
Using “due upon receipt” on large invoices. This is unrealistic for invoices over $1,000 in most business contexts — clients can’t always pay immediately, and it can feel presumptuous. Use Net 7 if you want fast payment.
Setting terms shorter than the client’s approval cycle. If your client is a company where every payment requires manager approval, Net 7 terms won’t override that process — you’ll just end up with a technically late invoice that the client never intended to be late. Know your client’s internal process before setting terms.
Not updating terms for returning clients. If a client paid late on Net 30, try Net 14 for the next project. Terms are negotiable per invoice — you don’t have to use the same terms forever.
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