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"Payment terms" is the line on your invoice that decides when money actually arrives — and most freelancers either leave it blank (an interest-free loan of indefinite length) or copy "Net 30" from a template without knowing they just agreed to wait a month. Here's the vocabulary decoded, and a practical guide to choosing terms by client type.
The Vocabulary
- Due on Receipt (DOR): payment expected immediately upon receiving the invoice. The correct default for freelancers and small services.
- Net 7 / 15 / 30 / 60: full payment due within that many days of the invoice date. "Net 30" is corporate convention, not law of nature.
- EOM (End of Month): due at the end of the invoice month. "Net 30 EOM" = 30 days after month-end — an invoice dated 2 July isn't due till 30 August. Watch for this in client-imposed terms.
- 2/10 Net 30: an early-payment discount — 2% off if paid within 10 days, else full within 30. Corporates' AP systems actively hunt these discounts; it's a legitimate lever to pull payments forward.
- 50% advance, balance on delivery: the milestone structure — standard for project and event work.
- PIA (Payment in Advance) / CIA (Cash in Advance): full prepayment; normal for small-ticket sessions and first-time clients.
- Late fee / interest clause: e.g., "1.5% per month on overdue balances." Its presence changes behaviour more than its collection ever will.
What to Use, by Situation
Individual clients (weddings, family events, personal services): Never extend credit terms at all — individuals don't have AP departments, just moods and competing expenses. Use the advance-and-balance structure: 30–50% to book, balance on or before the event. The invoice's "terms" line simply reflects the milestone that's due.
Small businesses and startups: Due on Receipt or Net 7. Small businesses pay from the owner's attention span; a 30-day window means your invoice gets rediscovered in a month. Short terms + a payment link = paid this week.
Corporates and agencies: They'll push their standard — Net 30, sometimes Net 45/60 — and their process genuinely can't pay outside it. Your moves:
- Accept Net 30 but secure an advance (30–50%) outside the terms, invoiced at project start
- Offer 2/10 Net 30 if cash flow matters more than the 2%
- For Net 60 demands, price the credit in: 2–3% higher quote, transparently
- Get into their vendor system early — most "late" corporate payments are onboarding delays wearing a disguise
Retainers and recurring work: Invoice on the 1st, due by the 7th, ideally before the month's work. Recurring relationships are exactly where prepayment is easiest to normalize — see recurring invoices.
The Late-Fee Clause: Write It, State It, Rarely Charge It
A line like "Overdue balances accrue interest at 1.5% per month" does three jobs: it signals you track receivables, it gives your payment reminders an escalation rung ("per the invoice terms, interest applies from the 15th — happy to waive it if settled this week"), and it compensates you in genuinely bad cases. It must appear on the invoice and in the contract/quote the client accepted — a fee first announced after the delay won't stick, legally or relationally.
Terms Are Set Before Work, Not On the Invoice
The deepest mistake: treating terms as invoice fine print. Terms are part of the deal — they belong in your quote and contract, agreed before work starts. The invoice merely restates them. A client who accepted "50% advance, balance due on delivery, 1.5%/month thereafter" in writing has nothing to renegotiate when the invoice lands.
Quick Defaults Cheat Sheet
| Client | Terms |
|---|---|
| Individual / event | Advance to book; balance before delivery |
| New small business | 50% advance; balance Due on Receipt |
| Established small client | Net 7 |
| Corporate | Net 30 + advance; consider 2/10 |
| Recurring retainer | Invoice 1st, due 7th |
| Tiny one-off jobs | 100% upfront |
Then let the system enforce them: set default terms once, and every invoice carries its due date, payment link, and automated overdue status without you re-deciding each time. Brightdesk tracks due dates, partial payments, and balances per booking — the terms you set become the terms that actually happen.