Invoice payment terms explained

Payment terms are the rules on your invoice that tell your client when and how to pay. They seem like a small detail, but the terms you choose directly affect how quickly you get paid — and whether you get paid at all.

This guide explains every common payment term, when to use each one, and how to pick the right terms for your situation.

The most common payment terms

Due on receipt

Payment is expected immediately when the client receives the invoice. In practice, this means within 1–3 business days.

Best for: Small one-off projects, new clients you haven't worked with before, retail or point-of-sale transactions.

Watch out for: Some clients find "due on receipt" aggressive. If you're starting a relationship with a larger company, Net 14 may be more diplomatic while still being short.

Net 7 / Net 14 / Net 30 / Net 60

"Net" followed by a number means the full invoice amount is due within that many days of the invoice date.

• Net 7 — due within 7 days
• Net 14 — due within 14 days
• Net 30 — due within 30 days (the most common term in the UK)
• Net 60 — due within 60 days

Net 30 is the default for most freelance and B2B transactions in the UK. If you don't specify terms, UK law assumes 30 days from the date the client receives the invoice.

Best for: Net 30 works for most ongoing client relationships. Use Net 14 for smaller projects or when cashflow matters. Net 60 is common when working with large corporations or government clients — they often insist on it.

EOM (End of Month)

Payment is due at the end of the month in which the invoice is received. An invoice sent on 5 March would be due by 31 March.

Net 30 EOM means payment is due 30 days after the end of the month. So an invoice sent on 5 March would be due by 30 April.

Best for: Clients who process all payments in a monthly batch. Common in larger organisations.

Early payment discounts

These terms offer a discount for paying early. The format is: discount percentage / days for discount, followed by the full payment deadline.

2/10 Net 30 — The client gets a 2% discount if they pay within 10 days. Otherwise, the full amount is due within 30 days.

Example: On a £5,000 invoice with 2/10 Net 30, the client can pay £4,900 within 10 days or £5,000 within 30 days.

Best for: Encouraging faster payment from clients who have the cash. The 2% discount costs you money, but getting paid 20 days earlier can be worth it for cashflow. Use this selectively, not on every invoice.

Milestone payments

For larger projects, you can split the payment into milestones:

• 50/50 — 50% upfront, 50% on completion
• 30/30/40 — 30% upfront, 30% at midpoint, 40% on completion
• Monthly retainer — fixed amount invoiced each month for ongoing work

Best for: Projects over £2,000, or any project lasting more than a month. Milestone payments reduce your risk — you're never more than one milestone behind on payment.

Deposits

A deposit or advance payment is required before work begins. Common amounts are 25%, 33%, or 50% of the total project value.

Best for: New clients with no track record, large projects, or any situation where you're committing significant time before the client sees deliverables.

How to choose the right terms

Consider these factors:

Your cashflow needs. If you have fixed monthly costs (rent, subscriptions, contractors), you need predictable income. Shorter terms and deposits help.

Your client's size. Sole traders and small businesses can usually pay within 14 days. Large corporations often have finance departments that batch payments on 30 or 60-day cycles — you may not have a choice.

The project size. Small projects (under £1,000) → due on receipt or Net 14. Medium projects (£1,000–£5,000) → Net 30. Large projects (over £5,000) → milestone payments with Net 30 on each milestone.

The relationship. First-time clients → shorter terms or deposits. Established clients who always pay on time → you can be more flexible.

Your industry norms. Some industries have standard terms. Check what other freelancers in your field use and match it — then adjust based on your experience.

What happens when terms aren't met?

If a client doesn't pay within your stated terms, the invoice is overdue. Under UK law (the Late Payment of Commercial Debts Act 1998), you can:

• Charge statutory interest at 8% above the Bank of England base rate
• Claim fixed compensation (£40, £70, or £100 depending on the invoice amount)
• Recover reasonable costs of chasing the debt

See our full guide to dealing with late payments for step-by-step advice.

Setting terms on your invoices

Your payment terms should appear clearly on every invoice — not buried in a footer or separate terms document. State them in plain English:

• "Payment due within 30 days of invoice date"
• "Due on receipt — please pay within 3 business days"
• "2% discount if paid within 10 days. Full amount due within 30 days."

Include specific dates where possible. "Due by 15 April 2026" is clearer than "Net 30" for clients who don't know invoicing jargon.

Coinvoice lets you set default payment terms during onboarding and automatically calculates the due date on every invoice. You can override terms on individual invoices for specific clients.

Quick reference table

| Term | Meaning | Best for | |------|---------|----------| | Due on receipt | Pay immediately | Small projects, new clients | | Net 7 | Pay within 7 days | Quick turnaround work | | Net 14 | Pay within 14 days | Small-medium projects | | Net 30 | Pay within 30 days | Standard B2B default | | Net 60 | Pay within 60 days | Corporate clients | | EOM | Pay by end of month | Monthly batch payments | | 2/10 Net 30 | 2% off if paid in 10 days | Encouraging early payment | | 50/50 | Half upfront, half on delivery | Large projects |

The bottom line

Shorter terms get you paid faster. Deposits reduce your risk. Payment links remove friction. Consistent follow-up prevents overdue invoices from becoming bad debt.

Don't be afraid to ask for the terms you need. You're running a business, not asking for a favour.

Ready to set up professional invoices with built-in payment terms? Try our free invoice generator or sign up for Coinvoice to manage invoicing, payments, and reminders in one place.