Common payment terms and what they mean
The examples below all start from an invoice dated 15 March 2026. March has 31 days and April has 30.
| Term | Meaning | Due date for a 15 March 2026 invoice |
|---|---|---|
| Due on receipt | Pay as soon as the invoice arrives | 15 March 2026 (on receipt) |
| Net 7 | Full amount within 7 days | 22 March 2026 |
| Net 15 | Full amount within 15 days | 30 March 2026 |
| Net 30 | Full amount within 30 days | 14 April 2026 |
| Net 60 | Full amount within 60 days | 14 May 2026 |
| EOM | Due at the end of the month of the invoice | 31 March 2026 |
| Net 30 EOM | 30 days after the end of the invoice month | 30 April 2026 |
| 15 MFI | 15th of the month following the invoice | 15 April 2026 |
| 2/10 Net 30 | 2% discount if paid within 10 days, otherwise full amount in 30 | Discount until 25 March; full amount by 14 April 2026 |
| CIA / CWO | Cash in advance / cash with order | Before work starts |
| 50% upfront | Half on acceptance, the rest on delivery or by the due date | Split payment |
How to count Net 30: 15 March + 16 days takes you to 31 March, and 14 more days to 14 April, a total of 30 days. Net 60 adds another 30 days: 14 April + 16 days is 30 April, plus 14 is 14 May.
EOM conventions differ between industries; some read “EOM” as “Net 30 EOM”. Write the actual due date on the invoice to remove any doubt. In the invoice generator you set the payment terms in the Details step; add the exact due date there too.
Early-payment discounts: the 2/10 Net 30 maths
On a $5,000.00 invoice with 2/10 Net 30:
- Paid within 10 days: $5,000.00 × 2% = $100.00 discount, so the client pays $4,900.00.
- Paid on day 11 to day 30: the client pays the full $5,000.00.
What does the discount cost you? You give up $100.00 to receive $4,900.00 twenty days earlier (day 10 instead of day 30). That is 100 / 4,900 = 2.04% for 20 days. Over a year: 2.04% × 365 / 20 ≈ 37.2%. That is a high price for faster cash, so treat early-payment discounts as a deliberate choice, not a default.
In VAT countries, check how a discount affects the VAT; in Germany, for example, discounts agreed in advance must be indicated on the invoice under § 14 Abs. 4 Nr. 7 UStG.
Late fees and statutory interest
European Union
The EU Late Payment Directive (2011/7/EU) sets the baseline for business-to-business payments:
- Payment terms between businesses should normally not exceed 60 days, unless expressly agreed and not grossly unfair to the supplier.
- Public authorities must pay within 30 days (60 in exceptional cases).
- Late payers owe statutory interest of the reference rate plus at least 8 percentage points.
- The supplier can claim a fixed €40 compensation for recovery costs.
Germany: a debtor is in default 30 days after receiving the invoice (§ 286 Abs. 3 BGB); for consumers only if the invoice points this out. Default interest is 9 percentage points above the base rate for B2B and 5 points for consumers (§ 288 BGB), plus a €40 flat fee for B2B (§ 288 Abs. 5).
Netherlands: statutory commercial interest (wettelijke handelsrente) applies. Without an agreement, the payment term is 30 days (art. 6:119a BW). Since 2021, large companies may agree terms of no more than 30 days with SMEs.
United Kingdom
Under the Late Payment of Commercial Debts (Interest) Act 1998, a business can claim interest of 8% above the Bank of England base rate plus fixed compensation:
| Debt | Fixed compensation |
|---|---|
| Up to £999.99 | £40 |
| £1,000 to £9,999.99 | £70 |
| £10,000 or more | £100 |
Worked example: a £2,400 invoice is paid 30 days late. Assume, for illustration only, a base rate of 4%; check the current rate on the day the debt became late. The statutory rate is then 4% + 8% = 12% a year. Interest: £2,400 × 12% × 30 / 365 = £23.67. Compensation: £70. Total claim: £2,400 + £23.67 + £70 = £2,493.67.
United States
There is no general federal late-payment rule for private business transactions. Late fees and interest depend on your contract and state law, including any usury limits. The federal Prompt Payment Act covers payments by federal agencies. Put any late fee in your agreement and on the invoice, for example “1.5% per month on overdue balances, where permitted by law”, and check your state’s rules.
How to choose your payment terms
- Match your cash needs. Freelancers with little buffer often use Net 7 or Net 15, or ask for a deposit.
- Match your client. Large companies often have fixed payment runs and may insist on their own terms. In the EU, terms beyond 60 days between businesses need a clear agreement.
- Use deposits for big jobs. A share upfront reduces your risk. See quote vs estimate for deposit wording, and check local limits on deposits for home-improvement work.
- Be consistent. Put the same terms in your quote, contract and invoice.
- Write the date. “Due 14 April 2026 (Net 30)” beats “Net 30” alone.
Reminders and overdue invoices in our tool
After you download an invoice, mark it as Sent. In My documents it switches to Overdue once the due date passes unpaid, and the totals show what is outstanding, what is overdue and what was paid this year. For each overdue invoice the tool offers a polite reminder text to copy or open as an e-mail draft; we never send it for you. You can also download a calendar reminder (.ics) for the due date and add it to your calendar app.
When the payment arrives, click Mark as paid and, if needed, create a receipt from the invoice. New to invoicing? Start with how to make an invoice, check what to include on an invoice, or grab a blank invoice template.