Invoice payment terms explained: Net 30, due on receipt and more
What Net 7, Net 30, due on receipt, 50% upfront and early-payment discounts mean, which terms suit service businesses, and how to word them on an invoice.
Published · By the Invoice Mint team
The short answer
Payment terms tell a client when an invoice must be paid. “Due on receipt” means pay immediately; “Net 7”, “Net 15” and “Net 30” mean pay within that many days of the invoice date. For homeowners and small jobs, due on receipt or Net 7 is common; commercial clients often expect Net 30. Always print the resulting due date on the invoice, not just the term.
Payment terms are the line on your invoice that says when you get paid. Most service businesses pick them once, by habit, and never revisit them — even though they have more influence on cash flow than almost anything else on the document.
Common payment terms at a glance
| Term | What it means | Typical use |
|---|---|---|
| Due on receipt | Pay as soon as the invoice arrives | Homeowners, small and one-off jobs |
| Net 7 | Pay within 7 days of the invoice date | Residential work, repeat clients |
| Net 15 | Pay within 15 days | Small commercial clients |
| Net 30 | Pay within 30 days | Commercial and property-management clients |
| 50% upfront | Half before work starts, balance on completion | Larger jobs, special-order materials |
| Progress billing | Invoice at agreed stages of the job | Multi-week projects |
| 2/10 Net 30 | 2% off if paid within 10 days, otherwise due in 30 | Commercial clients you want paying early |
How “Net” terms are counted
“Net” terms count calendar days from the invoice date, not from when the client opens it. An invoice issued September 1 on Net 30 is due October 1. That is also why sending the invoice the day the job finishes matters: every day you wait to issue it is a day added to when you are paid.
Choosing terms for a service business
Residential clients
Homeowners pay personally and do not run accounts-payable cycles, so short terms are normal. Due on receipt or Net 7 works for most jobs. For anything with significant materials, take a deposit before you start.
Commercial clients
Businesses and property managers usually pay in batches and may require Net 30 regardless of what your invoice says. Ask about their payment cycle and any purchase-order requirement up front, and include the PO number on the invoice so it is not held up.
Large or long jobs
Do not carry weeks of labour and materials on your own cash. Use a deposit plus progress invoices at clear milestones — materials delivered, rough-in complete, final walkthrough — each with its own due date.
How to word payment terms on an invoice
Keep it to one or two plain sentences near the total. For example:
Payment due within 7 days — by September 30, 2026. E-transfer to [email protected] or cheque payable to Your Business Ltd.
If you use a late fee, state it here and on the estimate, in the form your local rules allow. A fee the client never agreed to is hard to collect and harder to defend.
Set it once
Choose default terms for each kind of client, save them in your invoicing app, and let the due date fill itself in from the issue date. Change them per job only when the estimate said otherwise.
Common questions
What does Net 30 mean on an invoice?
Net 30 means the full amount is due within 30 calendar days of the invoice date. An invoice dated September 1 on Net 30 terms is due October 1.
What does “due on receipt” mean?
Due on receipt means the client should pay as soon as they receive the invoice. In practice many businesses treat it as due within a few days, so it helps to print a specific due date as well.
What payment terms should a contractor use?
For residential work, due on receipt or Net 7 is common, often with a deposit before work starts on larger jobs. For commercial clients, Net 15 or Net 30 is typical. Agree the terms in the estimate so the invoice holds no surprises.
Can I charge a late fee on an unpaid invoice?
Often, if the late fee was agreed in advance and stated on the estimate or contract. Rules on late fees and interest differ by province and state, so check what applies where you work before adding one.
