Invoice payment terms explained, and which ones to actually use
Terms are the least glamorous line on an invoice and the one with the most direct effect on your bank balance. Here is what each one means and how to choose.
Net 7, net 14 and net 30 mean payment is due that many days after the invoice date, not after the work finished. For domestic customers, payment on completion or net 7 is normal. For commercial customers, net 30 is the common expectation, so quote for it rather than being surprised by it.
What net 7, net 14 and net 30 actually mean
Net followed by a number means the full amount is due that many calendar days after the invoice date.
Net 30 does not mean thirty working days, and it does not run from the day the job finished or the day the customer opened the email. It runs from the date printed on the invoice. That single fact is why a slow invoicing habit costs real money: date it four days late and you have moved your own payment four days later for nothing in return.
A few other terms you will see:
- Due on receipt. Payment expected immediately. Common, and the weakest wording on any invoice, for reasons below.
- Payment on completion. Due when the work is done, typical for domestic trade work and paid at the door.
- 50 percent up front, balance on completion. Standard on jobs where you buy materials before you start.
- 2/10 net 30. A two percent discount if paid within ten days, otherwise the full amount at thirty. Common in wholesale, rare in trade work, and usually an expensive way to buy a few days.
Why due on receipt is the weakest thing you can write
Due on receipt has no date in it, and a deadline without a date cannot be missed.
Think about what happens on the other side. An accounts clerk processing forty invoices sorts them by due date. Yours has no due date, so it goes to the bottom of the pile, and it stays there because nothing ever makes it move up. A homeowner sees it, means to pay it after dinner, and there is no moment at which their phone or their conscience says it is now late.
It also weakens you later. Chasing an invoice that was due "on receipt" means arguing about when it was received. Chasing one that says due 18 August is arithmetic. If you want a single change that improves collection with no downside, replace due on receipt with a real date on every invoice you send. The sequence for chasing when that date passes is in the guide on chasing an unpaid invoice.
Choosing terms by who you are billing
Pick terms based on how the customer pays, not on what feels fair, because a large company will pay on its own cycle regardless of what you write.
| Customer | Sensible terms | Why |
|---|---|---|
| Domestic, small job | Payment on completion | They are standing there. This is the highest collection rate available to you. |
| Domestic, larger job | Deposit, then net 7 | Materials are covered up front and the balance has a short, clear window. |
| Letting agent | Net 14 with a property reference | They pay on a cycle and need to match the invoice to a property. |
| Small business | Net 14 | Usually paid by the owner, who acts quickly when there is a date. |
| Large company | Net 30 with a PO number | They have a payment run. Fighting it costs more than pricing for it. |
If a customer imposes long terms you cannot change, the honest response is to price for it rather than resent it. Waiting sixty days for money is a financing cost, and it belongs in the quote.
Getting paid faster without shortening the terms
Most of the delay in getting paid sits before the terms ever start counting.
- Invoice the same day. The single largest lever, and the only one entirely within your control. The clock cannot start until you start it.
- Send it to the right person. The site manager who hired you is often not in the payment chain at all.
- Include the PO number. Where a company uses purchase orders, an invoice without one can sit unprocessed indefinitely.
- Put bank details on the document. Every extra step between reading the invoice and paying it is a chance for the moment to pass.
- Take a deposit on material heavy work. It halves the amount exposed to the terms in the first place.
Together these usually beat any change to the terms themselves, because they attack the part of the timeline nobody measures.
Late fees and interest, and whether they are worth it
You can usually charge interest on overdue commercial debt, but the deterrent works only if the terms said so before the invoice went out.
Several countries set a statutory rate for late commercial payment, and some allow a fixed recovery charge on top. The rules and rates differ, so check what applies where you trade rather than copying a number from a website written for somewhere else.
In practice, the value is mostly in the wording rather than the money. A line reading "Late payment interest applies at the statutory rate after the due date" tells the customer you track dates. Applying it to a domestic customer three weeks late will often cost you the relationship for the price of a coffee, so treat it as a commercial tool and use judgement on everything else.
Wording that belongs on the invoice
Keep the terms block short, specific and in the same place on every invoice you send.
A workable block reads: Payment terms: net 14. Due 18 August 2026. Bank transfer to Apex Electric, account and sort code below. Please quote invoice 1042 as the reference. That is four short sentences and it removes every reason to reply before paying.
Two additions worth making. If you take card payments on site, say so, because a customer with a card in their hand pays now rather than later. And if a deposit has already been paid, show it as a deduction with the balance calculated, so nobody has to do arithmetic to work out what to transfer. The rest of the invoice structure is covered in how to write an invoice, and the difference between a quote, an estimate and an invoice is set out in the guide on quotes and estimates.
Sensible defaults if you do not want to think about it
If you would rather set this once and never revisit it, these defaults will not let you down.
Domestic work: payment on completion, taken on site where you can. Larger domestic work: a deposit covering materials, then net 7 on the balance. Commercial and agency work: net 14, moving to net 30 for large companies who will pay on that cycle anyway. Emergency and out of hours work: paid at the time, every time, because urgency is the leverage and it is gone by the following week.
Then apply the rule that matters more than all of them. Date the invoice the day the work finishes, and send it the same day. Terms decide when the money is due. Sending decides when the counting starts.
Payment terms questions
Does net 30 mean thirty working days?
No, it means thirty calendar days from the invoice date. If a customer is treating it as working days, that is a conversation worth having early, because the difference is roughly two weeks of your money.
Can I change terms for an existing customer?
Yes, going forward, and it is easier than it feels. Tell them before the next job rather than surprising them on an invoice, and give a reason tied to the work rather than to them, such as materials being paid for up front.
What terms should a brand new business use?
Shorter than you think, and paid on completion wherever the customer is present. Long terms are a financing decision, and a new business is the least able to fund a customer for a month.
Should the due date be on the invoice or in the email?
On the invoice. Emails get separated from attachments, forwarded without the message, and printed without the body. Anything that matters belongs on the document itself.
Related guides
The same paperwork, trade by trade
The trade pages show Invoice Local doing this in context, with real line items and the wording each trade uses. There is also a free invoice template if you would rather start from a blank document.
Terms only start counting when you send it
Invoice Local sets the due date from your terms automatically and sends the PDF from your phone the moment the job is done.