AvoInvoice Payment Terms: What to Write So You Get Paid on Time
What invoice payment terms mean (Net 30, Net 15, due on receipt, 2/10 net 30), which to use for homeowners vs companies, how to word late fees and deposits, and the.
What “payment terms” means on an invoice
Payment terms are the part of the invoice that says when the money is due, how it can be paid, and what happens if it is late. They sit under the total, and they are the first thing a bookkeeper reads and the last thing a homeowner reads, which is why they have to be short and specific.
Three things belong there: a due date (a real date, not a phrase), the accepted payment methods, and the late fee if you charge one. Everything else, such as warranty or thanks, goes in the notes.
The common terms and what they mean
| Term on the invoice | Meaning | Typical use |
|---|---|---|
| Due on receipt | Pay as soon as you get it. In practice, within a few days. | Homeowners, small jobs, one-off clients |
| Net 7 / Net 10 | Pay within 7 or 10 days of the invoice date. | Repeat residential clients, small businesses |
| Net 15 | Pay within 15 days. | Contractors and trades billing businesses |
| Net 30 | Pay within 30 days. The default for business-to-business invoices. | Companies with accounts payable, property managers |
| Net 60 / Net 90 | Pay within 60 or 90 days. Only accept if the contract requires it. | Large corporate or government clients |
| 2/10 Net 30 | 2% discount if paid within 10 days, otherwise full amount in 30. | When you want to pull payment forward |
| 50% deposit, balance on completion | Half before work starts, half when done. | Jobs with materials or more than a week of work |
| Progress billing | Payments at milestones (30/30/40, or monthly). | Construction, long projects |
Which terms to use
- Homeowners and individuals: due on receipt or Net 7, with a deposit if you buy materials. Nobody at home has an accounts-payable cycle; the invoice is paid when it is read, or forgotten.
- Small businesses: Net 15. Long enough to go through their bookkeeper, short enough that it is paid this month.
- Companies and property managers: Net 30, because their system will pay on Net 30 regardless of what you write. Ask for a PO number before the job so the invoice is not rejected.
- New clients of any kind: a deposit. 25–50% before work starts is normal in the trades and nobody serious objects.
- Repeat clients who pay late: shorten the terms and add the late fee. Terms are a tool, not a courtesy.
How to word it on the invoice
Pay by Zelle (208-555-0142), check to Ridgeline Carpentry LLC, or card at the link in the email.
Deposit of $1,000 received March 2 and credited above.
Balances unpaid after the due date accrue a late fee of 1.5% per month.
Late fees: what is allowed and what works
- A late fee must be stated before the work, on the estimate or contract, and repeated on the invoice. A fee that appears for the first time on the overdue notice is unenforceable and loses the client.
- 1–1.5% per month (12–18% a year) is the common range and is within most states' limits for commercial debts. Some states cap interest on consumer debts lower; a flat fee ($25 after 15 days) avoids the question.
- The fee's job is to be mentioned, not collected. Most trades waive it for a client who pays after one reminder and keep it for the ones who do not.
Deposits and partial payments
- State the deposit on the estimate, collect it before buying materials, and show it on the invoice as a negative line (“Deposit received Mar 2, −$1,000”) so the total is the balance due.
- For a partial payment, issue a receipt for the amount received and a revised invoice showing the balance and its due date. Do not quietly accept a short payment; put the shortfall in writing the same day.
How clients pay, and why it changes when you get paid
- Every extra step between reading the invoice and paying it costs days. Zelle, Venmo and ACH are free and instant; a card link costs 3% and gets paid the same day; a mailed check costs a week.
- Put the exact payment details on the invoice, not “contact us for payment options”. Phone number for Zelle, the payee name for checks, the link for cards.
- If you invoice from an app, turn on the pay-by-link option even if it costs a fee: the fee is smaller than the cost of chasing.
Fill it on your iPhone in a minute instead
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Questions
What does Net 30 mean on an invoice?
Payment is due 30 days after the invoice date. If the invoice is dated March 1, the money is due March 31. “Net” means the full amount with no discount.
What is the difference between “due on receipt” and Net 7?
Due on receipt means immediately; Net 7 means within seven days. In practice they are paid at the same speed, but Net 7 gives a date you can point to when sending a reminder.
Can I charge interest on a late invoice?
Yes, if the terms were disclosed before the work and the rate is within your state's limit. 1–1.5% per month is standard. Write it on the estimate, the contract and the invoice.
How do I write payment terms for a deposit?
“50% deposit ($2,400) due on acceptance; balance due on completion.” On the invoice, show the deposit as a credit line so the client sees the balance, not the contract total.
What payment terms should a contractor use?
Deposit before materials, progress payments on jobs longer than two weeks, Net 15 for the final invoice to a homeowner, Net 30 to a company. Put the terms on the estimate so the invoice repeats them rather than introducing them.