"Net 30" is one of the most common payment terms in business, but what does it actually mean? Understanding payment terms is crucial for managing your cash flow and setting clear expectations with clients.
What Does "Net 30" Mean?
Net 30 means payment is due within 30 days of the invoice date. The word "net" refers to the total amount due (after any discounts), and "30" is the number of days the client has to pay.
For example, if you send an invoice dated January 1st with Net 30 terms, payment is due by January 31st.
Common Payment Terms Explained
- Due on Receipt
- Payment is expected immediately when the invoice is received. Best for new clients or one-time transactions.
- Net 7
- Payment due within 7 days. Good for rush projects or when you need faster cash flow.
- Net 15
- Payment due within 15 days. A middle ground that works well for many freelancers.
- Net 30
- Payment due within 30 days. The industry standard for most B2B transactions.
- Net 60 / Net 90
- Payment due within 60 or 90 days. Typically used for large enterprises with longer payment cycles.
- 2/10 Net 30
- A 2% discount if paid within 10 days, otherwise full amount due in 30 days. Encourages early payment.
How to Choose the Right Payment Terms
The payment terms you choose should balance your cash flow needs with what's reasonable for your industry and clients. Consider these factors:
1. Your Cash Flow Needs
If you have regular expenses (rent, subscriptions, contractors), you might need shorter payment terms to ensure money comes in regularly. Freelancers often benefit from Net 15 or even Due on Receipt terms.
2. Industry Standards
Different industries have different expectations:
- Freelance/Creative: Net 15 to Net 30
- Construction: Net 30 to Net 45
- Enterprise B2B: Net 30 to Net 60
- Retail/E-commerce: Due on Receipt
3. Client Relationship
For new clients, consider shorter terms or even requiring a deposit. Once you've established trust with repeat clients, you can offer more flexible terms.
4. Project Size
Larger projects often warrant longer terms because of the bigger dollar amounts involved. However, you might also consider progress billing for large projects.
Tips for Getting Paid Faster
- Offer early payment discounts - "2/10 Net 30" encourages clients to pay within 10 days for a 2% discount.
- Invoice immediately - Don't wait to send invoices. The sooner you invoice, the sooner you get paid.
- Make payment easy - Accept multiple payment methods (credit card, bank transfer, PayPal).
- Set clear expectations upfront - Discuss payment terms before starting work.
- Send reminders - A friendly reminder before and on the due date can prevent late payments.
What If a Client Pays Late?
Late payments happen. Here's how to handle them professionally:
- Send a friendly reminder on the due date
- Follow up a week later with a more direct message
- Consider adding late payment fees (mention these in your contract)
- For repeat offenders, require payment upfront on future projects
Include Payment Terms on Every Invoice
Always clearly state your payment terms on every invoice. This sets expectations and gives you a reference point if payment is late. With InvoiceBloom, payment terms are automatically included on all invoices, and you can track which invoices are approaching their due date.
The Bottom Line
Net 30 is the most common payment term, but it's not the only option. Choose terms that work for your business needs, industry, and client relationships. The most important thing is to be clear and consistent with your payment expectations.