Payment terms dictate when a client must pay you after receiving an invoice. Choosing the wrong payment terms can severely impact your business cash flow, leading to unpaid bills and stress.
Common Payment Terms Defined
1. Due on Receipt
"Due on Receipt" means the client is required to submit payment immediately upon receiving the invoice. This is common for initial deposits, micro-gigs, or direct B2C services.
2. Net 15
Payment is due within 15 calendar days from the invoice date. Net 15 is popular among digital agencies and contractors working on bi-weekly sprints.
3. Net 30
The industry standard for corporate and B2B clients. The client has 30 days to process payment.
4. Net 60
Payment is due in 60 days. Large enterprises often request Net 60, but freelancers should exercise caution as a 2-month delay can strain small business finances.