The short answer
For most small agencies, net 14 is the right default for project invoices: payment due 14 days after the invoice date. Accept net 30 from clients whose accounts payable team works to a monthly payment run. Agree to net 60 only with a deposit or milestone billing in place, because on a 3-month project it means funding the client’s work for most of a quarter.
Terms | Payment is due | Use it when | What it costs you |
|---|---|---|---|
Due on receipt | When the client receives the invoice | Deposits and small one-off jobs | The client’s payment run still decides the date |
Net 14 or net 15 | 14 or 15 days after the invoice date | Your default for project work | Larger clients may ask to change it |
Net 30 | 30 days after the invoice date | Clients with a monthly payment run | A month of working capital per invoice |
Net 30 EOM | 30 days after the end of the invoice’s month | Only if the client insists | An invoice sent on 2 March is due on 30 April |
Net 60 | 60 days after the invoice date | Large clients, with a deposit agreed | 2 months of credit, on every invoice |
2/10 net 30 | 30 days, or 10 days with 2% off | Rarely worth offering | About 37% a year for early payment |
What “net 30” actually means
“Net 30” means the full invoice amount is due 30 days after the invoice date. The number is the count of days, and “net” means the whole amount, with no discount taken.
The date the count starts from is the part that gets argued about. Write “30 days from the invoice date” in your contract rather than “30 days from receipt”, because receipt is whenever someone at the client finally opens the email. The difference between the two can be a week before anyone has done anything wrong.
Watch for EOM, short for end of month. “Net 30 EOM” counts 30 days from the last day of the month the invoice was issued in, so an invoice dated 2 March is not due until 30 April. Some clients propose it as a small administrative change. It adds up to a month to every invoice.
Why shorter terms do not always mean faster payment
A client with an accounts payable function pays in batches, often on 1 or 2 fixed dates a month. If the client pays on the 1st and the 15th, an invoice due on the 16th waits until the 1st of the next month, whatever your terms say. That delay has nothing to do with the client’s intentions.
That makes the payment run the more useful number to know. Ask at kickoff when the client runs payments and what the cut-off is for an invoice to be included, then send your invoice before it. This is one of the 7 reasons clients pay late and the easiest one to prevent.
Short terms still matter for 2 reasons. They set the date from which a follow-up is legitimate, and in the UK and EU they set the point from which late payment interest can start.
Which terms to use, by situation
Project work under $10,000
Invoice on delivery or at each milestone, on net 14. At this size most clients can pay from a card or approve the invoice without a purchase order, so a short window is realistic and the risk of carrying it for a month is not worth taking.
Retainers
Invoice at the start of the month for that month’s work, due before the month begins. A retainer invoiced in arrears on net 30 means you do up to 2 months of work before the first payment arrives, and if the client stops, the last month is the one you are waiting on.
Large clients with a procurement process
Expect them to propose their standard terms, usually net 30 and sometimes net 60, and expect little room to negotiate the number. Negotiate the structure instead: a deposit before work starts, invoices at milestones rather than at the end, and a purchase order raised before kickoff. A $40,000 project on net 60 billed at the end is very different from the same project with 30% up front and 3 milestone invoices.
Clients asking for net 60 or longer
Treat the extra days as something the client is buying. Either price it into the fee, or agree a deposit that covers your costs until the first payment. Taking a deposit is covered in how to ask for a deposit before starting client work. The cost worth naming: holding firm on terms may lose you the occasional large client, and whether that trade is worth it depends on how much of your cash that client would tie up.
Early payment discounts: 2/10 net 30
“2/10 net 30” means the client can take 2% off if they pay within 10 days, and otherwise pays the full amount at 30 days. It sounds like a small incentive. Worked out as an annual rate, you are paying 2% to receive your money 20 days sooner, which is roughly 37% a year.
It can make sense for an agency with a real cash gap and no cheaper credit available. For most agencies a deposit brings money in earlier at no cost, and the clients most likely to take the discount are the ones who would have paid on time anyway.
What the law says if your contract says nothing
Where your contract is silent, the law supplies default terms in some places. The figures below are for business-to-business invoices.
United Kingdom
If no payment date is agreed, a payment becomes late 30 days after the customer receives the invoice or the work is delivered. An agreed payment date between businesses usually has to fall within 60 days. On a late payment you can claim statutory interest of 8% plus the Bank of England base rate, and a fixed sum for recovery costs: £40 on debts up to £999.99, £70 from £1,000 to £9,999.99, and £100 from £10,000. If your contract sets its own interest rate, that rate applies instead of the statutory one.
European Union
Under the Late Payment Directive, businesses have to pay their invoices within 60 days unless they expressly agree otherwise and the agreement is not grossly unfair. Statutory interest is at least 8% above the European Central Bank’s reference rate, and you are entitled to at least €40 as compensation for recovery costs. Each member state writes these rules into its own law, so the details vary by country.
United States
There is no single rule for late payment between private businesses. What you can charge is set by state law, and many states limit the interest rate a contract can apply, so check your state’s limit before you put a figure in writing.
The 5 payment clauses to put in every contract
The terms, in days, and the date they count from. “Payment is due 14 days from the invoice date.”
The deposit. The percentage, and that work starts when it is received.
Late payment interest. A rate, or a reference to the statutory rate where one exists. You may never charge it, but having it in writing gives you something to point to when an invoice runs late.
What happens to the work when an invoice is overdue. The right to suspend work after a stated number of days, agreed while everyone is getting along.
Where invoices go. The client’s accounts payable address and whether a purchase order number is required. Send them from a shared billing address so replies reach whoever owns payment.
The fourth clause is the one agencies leave out most often, and the one that matters most once an invoice is 45 days late. Without it, stopping work reads as a threat. With it, you are applying terms the client already signed.
Changing terms with an existing client
Apply new terms to new work: the next statement of work, the next phase or the next retainer renewal. Changing the terms on an invoice already issued rarely goes well, and asking for it signals a cash problem the client did not know about.
Tell the client in writing a month before the change applies, in 2 or 3 sentences, and present it as standard process for all clients. If a client pushes back, you have a conversation about the next project rather than a dispute about the last one. The follow-up email templates cover what to send once terms are in place and an invoice still runs late, and the cost of following up your own invoices shows what those extra days cost you.
FAQ
What does net 30 mean on an invoice?
Net 30 means the full amount of the invoice is due 30 days after the invoice date. “Net” means no discount is taken. If the terms say “net 30 EOM”, the 30 days start from the end of the month the invoice was issued in.
Is net 30 or net 60 better for a small agency?
Net 30 is better for the agency, and shorter terms such as net 14 are better still for project work. Net 60 means waiting 2 months for each payment, so accept it only with a deposit or milestone billing, or with the extra time priced into the fee.
What does 2/10 net 30 mean?
The client may deduct 2% if they pay within 10 days; otherwise the full amount is due at 30 days. As an annual rate, the discount costs you roughly 37% for getting paid 20 days sooner.
Can I charge interest on a late invoice?
Usually yes, if your contract allows it or the law provides for it. In the UK, statutory interest for business-to-business debts is 8% plus the Bank of England base rate. In the EU it is at least 8% above the European Central Bank’s reference rate. In the US, state law sets the limits.
What is the longest payment term a client can require?
In the UK, an agreed payment date between businesses usually has to be within 60 days. Under the EU Late Payment Directive, businesses must pay within 60 days unless both sides expressly agree otherwise and the terms are not grossly unfair. There is no equivalent general limit for private businesses in the US.
Not legal or tax advice. Payment law and enforceable interest rates vary by state and country — have your payment terms and late payment clauses reviewed by your own lawyer before use.