Net 30 vs due on receipt: which payment terms should freelancers use?

Payment terms are the first thing to settle in getting paid, and the pay-on-time guide lists the common ones. This post goes one step further: what each term does to your cash, who it suits, and what the law fills in when your contract says nothing.

What net 30, net 15 and due on receipt mean

"Net" is the full amount after any agreed discounts. If your contract counts business days, the business days calculator gives the exact due date. To see whether an early-payment discount like 2/10 net 30 is worth offering, try the early payment discount calculator.

The cash-flow math: $3,000 a month under each term

The useful number is how much money clients owe you on an average day. For steady billing it's roughly your monthly invoicing times the days clients take to pay, divided by 30.

Which term to choose, by client type

Ask on the first call: "When do you pay vendors, and what do you need on an invoice?" A company that pays on the 15th and the 30th will pay a net 7 invoice on its next run anyway, so net 15 costs you nothing and avoids an overdue reminder that looks rude.

What the law says when your contract names no date

Three states now set a default for freelancers. Each applies only to covered freelancers and contracts, and each lets the contract set its own date.

These laws protect the freelancer, so they don't stop you from setting shorter terms. California's law also bars a client, once work has begun, from making on-time payment conditional on you accepting less money or doing more work than the contract says. Put the term in writing either way: a due date in the contract beats any default.

How to shorten terms with an existing client

Changing net 30 to net 15 with a client you already work with goes better as a dated notice than as a surprise on the next invoice. Tell them in writing at least one billing cycle ahead, give a reason that isn't about them ("I'm moving all clients to the same terms"), and apply the change from a specific invoice or project. If they refuse, ask for something in exchange, such as a deposit on new projects or card payment through the invoice link. Clients who pay late under net 30 rarely pay faster under net 15 by themselves, so pair the change with reminders that go out on a fixed schedule.

Copyable payment terms lines

DUE ON RECEIPT
Payment is due on receipt of this invoice. Pay by card at the link above or by bank transfer to the account below.

NET 15
Payment is due within 15 days of the invoice date ([date]). After that, a late fee of [1.5]% per month applies, as agreed in our contract dated [date].

NET 30 WITH EARLY-PAYMENT DISCOUNT
Payment is due within 30 days of the invoice date. Pay within 10 days and take 2% off: $[amount] instead of $[total].

For more clause wording (deposit, late fee, currency, who pays transfer fees), see payment terms wording. Before you set a late fee, check what your state allows, and use the invoice late fee calculator to work out the amount on a specific invoice. The freelance contract template has a payment section ready to fill in.

In SoloWOS

In SoloWOS Invoicing you set the issue date and due date on each invoice, and the Notes field holds your terms line. Optional reminders go out 3 days before the due date and 3 and 7 days after it while the invoice is unpaid, and each invoice shows sent, viewed, paid or overdue. Clients can pay by card from the invoice link once your Stripe account is connected. There's no automatic late fee; add it as a line on a new invoice when your contract allows it.