Payment Terms Explained: Net 15, Net 30, or Due on Receipt?

Decoding Payment Terms

If you look closely at invoices from large corporations, you will often see cryptic phrases like "Net 30" or "2/10 Net 30" hidden near the bottom.

For a new freelancer or small business owner, this terminology can be incredibly confusing. What does "Net" actually refer to? And more importantly, what should you be writing on your own invoices?

Here is a simple translation of the most common invoice jargon.

What Does "Net" Mean?

In invoicing, "Net" simply refers to the total number of days a client has to pay the invoice in full after the invoice date. The clock starts ticking the day you send the document.

• Net 15: The client must pay the full amount within 15 days of the invoice date.
• Net 30: Payment is due within 30 days. This is the standard in the corporate B2B world.
• Net 60 / Net 90: The client has 60 or 90 days to pay. These terms are typical in manufacturing, enterprise retail, or government contracts.

Note: If your invoice is dated May 1st with "Net 30" terms, the client is not technically considered "late" until May 31st. You cannot penalize them for paying on day 29.

What Does "2/10 Net 30" Mean?

This is a specific type of trade credit that offers an early payment discount. "2/10 Net 30" translates to: "The entire bill is due in 30 days, but if you pay me within 10 days, I will give you a 2% discount."

While common in wholesale distribution to encourage fast cash flow, it is rarely used by modern digital freelancers, as giving up 2% of your income is usually unnecessary.

What is "Due on Receipt"?

"Due on receipt" means exactly what it sounds like. The client is expected to initiate payment the moment they open the invoice.

By default, many freelancers prefer this because it sets an expectation of immediate compensation. However, you must be realistic: a massive corporation cannot physically process a "Due on receipt" invoice because their Accounts Payable department runs on strict bi-weekly or monthly payout cycles.

EOM (End of Month)

If an invoice says "Net 30 EOM", it means payment is due 30 days after the end of the month in which the invoice was sent. If you send the invoice on March 5th, the clock doesn't start ticking until March 31st, making the final due date April 30th.

Avoid accepting EOM terms if you can, as they drastically stretch out your wait times.

Which Payment Terms Should You Choose?

• For B2C (Consumers) or Small Projects: Use Due on Receipt or Net 7. Individuals and small business owners can easily put a charge on a credit card immediately.
• For B2B (Corporations): Use Net 15 or Net 30. Accept that larger companies have ingrained bureaucratic processes for cutting checks, and forcing "Due on receipt" will just result in frustration.

The most crucial rule? Never put a payment term on an invoice that wasn't already explicitly agreed upon in the initial contract.