Payment terms explained: Net 30, Net 15 and due on receipt

"Net 30" means payment is due 30 days after the invoice date. Net 15 and Net 7 work the same way with shorter windows. "Due on receipt" means immediately, though in practice it is treated as "whenever the next payment run happens". For most small businesses Net 14 is the sweet spot — short enough to protect cash flow, long enough that a client's accounts process can actually accommodate it.

The terms, plainly

• Due on receipt — immediately. Fine for consumers and one-off jobs. Meaningless to a company with a monthly payment run.
• Net 7 — a week. Reasonable for trades and small jobs where you bought materials.
• Net 14 / Net 15 — the practical default for small suppliers.
• Net 30 — standard for business-to-business. Many large companies will not agree to anything shorter.
• Net 60 / Net 90 — common with big corporates and retailers, and brutal on a small supplier's cash flow.
• 50/50 — half up front, half on completion. The single best protection on a large job.

Shorter terms do not always mean faster payment

This surprises people. If your client runs payments on the 25th of each month, an invoice marked Net 7 dated the 3rd does not get paid on the 10th — it gets paid on the 25th, and now it is "overdue", which sours a relationship for no gain. Ask how the client pays before you set the term. Matching their run date beats demanding a shorter window.

Deposits change the maths

On anything where you buy materials, a deposit is not aggressive, it is normal. You are not asking them to trust you less — you are declining to finance their project out of your own pocket. Quote it as part of the price from the start and almost nobody objects.

Put the term where it can be seen

Terms buried at the bottom in six-point type have no force. The due date should be a real date near the top of the invoice, and the term should be stated in words as well: "Payment due within 14 days of the invoice date."

Where "net 30" actually came from

The phrase is a survival from a time when invoices travelled by post and payment travelled by cheque. "Net" meant the full amount with no early-settlement discount applied; "30" was the days you had. The alternative you sometimes still see written as 2/10 net 30 means: take 2% off if you pay within 10 days, otherwise the whole amount is due at 30.

That discount structure is nearly extinct in small business and worth understanding anyway, because 2% for paying 20 days early is an enormous annualised return — roughly 37% — which tells you how badly sellers wanted cash and how expensive slow payment really is.

When the clock starts

This is the part that causes real arguments. Net 30 from what? Three candidates, and they can be weeks apart:

• Invoice date. What most small suppliers assume.
• Date of receipt. What many large customers mean, and receipt can mean the date it reached the accounts inbox, not the date you sent it to your contact.
• End of month following. "30 days EOM" on an invoice dated 2 September is due 31 October — 59 days, not 30.

Write the actual due date on the document. "Due 14 October 2026" cannot be reinterpreted; "net 30" can.

What terms to pick when you are small

Fourteen days is a reasonable default for a sole trader. Seven is defensible for consumer work where the customer is standing in front of you. Thirty is what you concede to a business customer who has a payment run, and forty-five or sixty is what large organisations will try to impose.

The trap is thinking shorter terms get you paid sooner. They do not, on their own. A customer running payments on the 25th of each month will pay on the 25th whether your invoice says 7 days or 30. What shorter terms buy you is the right to start chasing sooner — which is the thing that actually works.

Ask how they pay before you set the terms

One question at the quoting stage, before any of this matters: "When do you run payments?" A client who runs weekly is a different proposition from one who runs monthly on a fixed date. Align your invoice date to land just before their run and you can gain three weeks without negotiating anything.

This is worth more than any clause. A fortnight of difference on every invoice, permanently, from asking a question once.

Terms only matter if you enforce them

A due date with nothing behind it teaches customers that your dates are decorative. You do not need to be aggressive — you need to be predictable. A reminder that arrives the morning after the due date, every time, trains a client faster than any late fee.

Chasing a late invoice covers the escalation, and whether a late fee is worth charging covers the stick. Most of the effect comes from the first reminder being automatic.

Statutory rights exist whatever your terms say

In many jurisdictions, commercial debts carry a statutory right to interest and recovery costs once payment is late, whether or not your invoice mentions it. The UK, the EU and Australia all have versions of this. It rarely gets claimed on small invoices, but it changes the tone of a final reminder to know it is there — you are not asking for a favour, you are declining to keep extending credit you never agreed to extend.

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