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What is Payment terms?

Payment terms are the rules on an invoice stating when and how the customer must pay — net 30, due on receipt, deposit requirements, accepted methods, and late fees. Clear terms prevent the most common billing dispute: 'I didn't know it was due.'

In practice

A consultant's invoice footer reads: 'Net 15. Bank transfer or card. 1.5% monthly late fee after 15 days overdue.' When a client pays late, there's no argument about what was agreed.

Related terms

  • Net 30 — Payment due in full 30 days after the invoice date.
  • Late fee — A penalty charged when an invoice is paid after its due date.
  • Early payment discount — A discount for paying well before the due date (e.g. 2/10 net 30).

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Frequently asked questions

Where do payment terms go on an invoice?

In a terms section near the total and due date — somewhere the client can't miss. Also reference them in your contract or estimate.

What are the most common payment terms?

Net 30 for B2B, net 15 for freelancers, due on receipt for small jobs, and 50% deposit for project work.

Can I change payment terms for a late-paying client?

Yes — for future work. Shorten their terms or require deposits. You can't retroactively change terms on invoices already sent.