Invoice payment terms explained: Net 30, due on receipt and more

When you sell to consumers, you are paid at checkout. The moment you start selling wholesale or to business customers, you meet a new question: when will you be paid? The answer is set by the payment terms on your invoice.

This guide explains the common terms in plain English and helps you choose ones that protect your cash flow.

The most common payment terms

Term	What it means
Payment in advance	The customer pays before you ship
Deposit (for example 50% upfront)	Part is paid before work starts or goods ship, the rest later
Due on receipt	Payment is expected as soon as the invoice arrives
Net 7, Net 15, Net 30, Net 60	The full amount is due within 7, 15, 30 or 60 days of the invoice date
EOM (end of month)	Payment is due at the end of the month in which the invoice is issued
2/10 Net 30	The customer may take a 2% discount by paying within 10 days; otherwise the full amount is due in 30

“Net” simply means the full invoice amount. Unless you state otherwise, the days are counted from the invoice date, so write the actual due date on the invoice as well. “Due 13 December 2026” is harder to misread than “Net 30”.

Which terms suit a small seller?

Long payment terms are a free loan from you to your customer. A big company can afford that; a small shop usually cannot. Reasonable choices:

• New customers: payment in advance, or a deposit of 30 to 50% with the rest due before shipping.
• Small orders: due on receipt, with an online payment link.
• Regular wholesale customers with a good history: Net 15 or Net 30.
• Custom or made-to-order products: always take a deposit that covers at least your material costs.

Net 30 is a common standard in wholesale, and buyers may ask for it. You can agree, but it is your decision. Many small sellers offer Net 30 only after two or three orders paid on time.

Tip: Before you accept longer terms, check that you can pay your own suppliers and bills while you wait. If you cannot, ask for a deposit.

Are early payment discounts worth it?

A term such as 2/10 Net 30 gives the customer 2% off for paying 20 days sooner. That is generous: for the buyer, it is equivalent to an annual return of roughly 37%. For you it means giving up 2% of the invoice.

It can be worth it if you are regularly short of cash while waiting for payments. If your cash flow is comfortable, a clear due date and good reminders usually cost less.

What about late fees?

You can state on your invoice that late payments carry interest or a fee. Three things to know:

1. It must be agreed in advance. Put it in your terms and on the invoice before the sale, not after the payment is late.
2. The law sets limits. Many countries and states cap late interest or define a legal rate, and some give businesses an automatic right to interest on late commercial payments. Check your local rules.
3. It works mostly as a signal. Small sellers often waive the fee the first time but keep the clause because it shows that due dates are serious.

Seven habits that get invoices paid on time

1. Agree the terms before the sale, in writing, even by email.
2. Invoice immediately. Send the invoice the day you ship, not at the end of the month.
3. Send it to the right person. Ask who handles payments and whether they need a purchase order number on the invoice.
4. Make it complete. Missing details are the most common reason for delays. Our guide to invoicing basics lists what every invoice needs.
5. Make paying easy. Offer a card or bank payment link, and show your bank details clearly.
6. Send polite reminders: a few days before the due date, on the due date, and a week after.
7. Pause new orders for customers with overdue invoices until they are settled.

Invoicing software can automate the reminders and show unpaid invoices at a glance, which removes most of the awkwardness.

A reminder email you can copy

This is a first, friendly reminder. For the full sequence, from the heads-up before the due date to the final notice, see our overdue invoice email templates.

Subject: Invoice 2026-0042 due on 13 December

Hello [Name],

This is a friendly reminder that invoice 2026-0042 for [amount] is due on 13 December. You can pay by bank transfer or with the payment link below.

If you have already paid, thank you, and please ignore this message. If anything is unclear, just reply to this email.

Best regards, [Your name]

Need a tool that sends reminders for you? Compare the best invoicing software for small business.

Key takeaways

• Payment terms decide when you are paid; shorter is safer for a small business.
• Use deposits or payment in advance for new customers and custom orders.
• Write the actual due date on every invoice.
• Late fees must be agreed in advance and follow local law.
• Prompt invoices, easy payment and automatic reminders prevent most late payments.