Net 30, Net 60, Due on Receipt — Payment Terms Explained

You sent the invoice. The work is done. Now you wait.

But how long you wait depends entirely on what you wrote in the "Payment Terms" field — or whether you included one at all. Payment terms are not just administrative boilerplate. They set the legal due date for your invoice and directly control your cash flow.

Here's what each common payment term means, when to use it, and the one mistake that costs freelancers the most money.

What Are Payment Terms?

Payment terms define the window between when your client receives the invoice and when payment is due. They're usually written in a shorthand format on the invoice itself.

The most common terms freelancers encounter:

That's the simple part. The nuance is in knowing which one to use and what happens when your terms conflict with the client's internal payment policies.

Net 30 — The Freelancer Default

Net 30 is the most widely used payment term in B2B transactions. It means the client has 30 calendar days from the invoice date to send payment.

When to use it: Net 30 is appropriate for most ongoing freelance relationships. It's standard enough that clients won't question it, and it gives you a reasonable expectation of when money should arrive.

What actually happens: In companies with formal AP processes, Net 30 means your invoice gets queued for the next payment run. Many companies batch their payments twice a month (e.g., on the 1st and 15th). So if your invoice arrives on the 3rd with Net 30, you might not get paid until the 15th of the following month — roughly 42 days out.

This is not the client being late. This is how corporate payment cycles work.

Pro tip: If you need payment by a specific date, don't rely on Net 30 alone. Set your invoice date a few days earlier, or use a specific due date instead of a relative term.

For a detailed breakdown of how to handle Net 30 terms, see What Is Net 30 Payment Terms?.

Net 45 — The Enterprise Middle Ground

Net 45 gives the client 45 calendar days from the invoice date to pay. It's less common than Net 30 but more common than freelancers expect — mid-size companies and agencies often use it as their default for contractors, particularly when they have multi-step approval chains.

When you'll see it: Net 45 is standard in healthcare, manufacturing, and large agency contracts. It also appears when a company's AP department runs bi-weekly payment cycles and wants a buffer to route the invoice through two or three approvers before releasing payment.

The math in practice: An invoice dated May 1 with Net 45 is due June 15. If the client's payment runs happen on the 1st and 15th and your invoice arrives May 3, the next qualifying run is June 15 — right on the edge. One missed run and you're waiting until July 1, roughly 60 days after the invoice date.

How to handle it: Net 45 is negotiable before you sign the contract. Once it's in the purchase order, AP will follow those terms regardless of what your invoice says. If you accept Net 45, factor the 6-week cash flow gap into your rate.

For a detailed breakdown of Net 45 and how to negotiate it, see What Is Net 45 Payment Terms?.

Net 60 — When the Client Holds the Cards

Net 60 gives the client 60 days to pay. It's increasingly common in enterprise and agency work, especially for new vendors.

When you'll see it: Many large companies have standard Net 60 terms for all freelancers and contractors. When you sign their vendor agreement, the payment terms are usually non-negotiable — they'll be Net 60 regardless of what your invoice says.

The cash flow problem: If you're doing ongoing work and your client pays Net 60, you're effectively financing two months of work before you see a dime. For a $5,000/month engagement, that's $10,000 in outstanding receivables at any given time.

How to handle it: If a client insists on Net 60, consider building the delay into your pricing. Some freelancers charge 10-15% more for Net 60 clients to offset the cost of waiting. You can also negotiate milestone payments — partial invoices at project checkpoints rather than one invoice at the end.

Due on Receipt — Stronger Than It Sounds?

Due on Receipt means payment is expected as soon as the client receives the invoice. In theory, this gets you paid fastest.

When to use it: Due on Receipt works best for small projects, one-off gigs, or clients you have a strong relationship with. It signals urgency.

The reality: Most large companies will ignore "Due on Receipt" and pay on their own standard schedule anyway. If their internal policy is Net 30, writing "Due on Receipt" on your invoice won't change their payment run timing. It might even annoy the AP clerk if it comes across as aggressive.

Small businesses and individual clients are more likely to respect "Due on Receipt" because they don't have rigid AP processes.

The One Mistake That Costs the Most Money

The single most expensive mistake is not putting any payment terms on your invoice at all.

When you leave the payment terms field blank, you're leaving it up to the client to decide when to pay. And the client will always choose the option that's best for their cash flow — which is the slowest option available.

More importantly, without explicit payment terms, it's harder to enforce late payment. If your invoice doesn't state when payment is due, the client can reasonably argue they didn't know the deadline. This weakens your position if you ever need to follow up on an overdue invoice or charge late fees.

Some countries have default payment terms defined by law. In the EU, for example, the Late Payment Directive sets a default of 30 days if no terms are specified — but you shouldn't rely on this. Explicit terms are always better than legal defaults.

Late Payment: What to Do When Terms Are Ignored

Even with clear payment terms, some clients pay late. Here's how to handle it:

Day 1 past due: Send a polite reminder. Sometimes invoices genuinely get lost in AP queues.

7 days past due: Follow up again, cc'ing the person who hired you (not just the AP email). Mention the specific payment terms from the invoice.

15-30 days past due: Escalate. Send a formal email stating the overdue amount, the original due date, and a new deadline. If your contract includes a late payment fee, mention it now.

30+ days past due: Consider whether this relationship is worth continuing. For significant amounts, a demand letter from a lawyer costs $100-200 and usually gets results.

Prevention is better than collection: The easiest way to avoid late payment is to agree on payment terms before the project starts, not when you send the invoice. Include them in your contract or statement of work.

How Payment Terms Interact With AP Processing

Payment terms don't exist in isolation. They interact with the client's AP process in ways most freelancers don't think about:

• New vendor onboarding delays payment regardless of terms. The first invoice from a new vendor often takes longer because AP has to set you up in their system, collect tax forms (W-9 in the US), and assign a vendor ID. Build an extra 1-2 weeks into your expectation for the first invoice.

• PO matching can override your terms. If the purchase order specifies Net 60, AP will follow the PO, not your invoice — even if you wrote Net 30.

• Approval routing adds time. Some companies require sign-off from multiple people before releasing payment. The more approvers, the slower the process.

If you're invoicing a corporate client for the first time, it's worth asking about their payment process upfront. "What are your standard payment terms?" and "How long does new vendor setup take?" are completely normal questions that save you from surprises later.

Choosing the Right Terms: A Quick Guide

Whatever terms you choose, make sure they're printed clearly on every invoice. If you use an invoice generator like InvoiceCraft, the payment terms field is built into the form — you select it once and it appears on every invoice.

For more on making your invoices AP-compliant (including why PO numbers and tax IDs matter just as much as payment terms), see our article on why AP departments reject invoices.

Go Deeper on Specific Payment Terms

If you need a complete breakdown of a specific term:

• What Is Net 45 Payment Terms? — When Net 45 applies, the math, and how to negotiate
• What Is Net 60 Payment Terms? — Why enterprise clients default to Net 60 and how to price around it

Frequently Asked Questions

Can I charge late fees for overdue invoices?

In most jurisdictions, yes — but only if the late fee was agreed upon in advance. Include a late payment clause in your contract (e.g., "1.5% monthly interest on overdue balances"). Without prior agreement, you can still ask for interest, but enforcement varies by location.

What's the difference between Net 30 and "30 days from receipt"?

Net 30 counts from the invoice date. "30 days from receipt" counts from when the client receives the invoice. The latter is slightly harder to enforce because you'd need to prove when they received it. Net 30 is cleaner because the date is printed on the invoice.

Should I offer early payment discounts?

Some freelancers offer terms like "2/10 Net 30" — meaning a 2% discount if paid within 10 days, full amount due in 30. This can work with small businesses but is rarely taken up by large companies. For most freelancers, it's not worth the complexity.

What if my client's PO says Net 60 but I want Net 30?

Negotiate before signing the purchase order or contract. Once the PO is issued with Net 60 terms, AP will follow the PO, not your invoice. If you can't negotiate better terms, factor the longer wait into your project pricing.

Do payment terms apply to deposits?

No. Deposits are typically due before work begins, outside of the standard payment terms. Your invoice terms (Net 30, etc.) apply to the final balance invoice, not the deposit request.

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