Payment terms explained: net 7, net 14, net 30 and due on receipt

"Payment terms" sounds like something a lawyer writes into a contract, but on a small business invoice it's just one line: how long the client has to pay you. Get that one line wrong and you'll spend the next month chasing money you've already earned.

What payment terms actually control

A payment term sets the due date relative to the invoice date. That's all it is. "Net 14" means the invoice is due 14 days after you send it. "Due on receipt" means as soon as they open it. The words vary, the effect is the same: it tells the client's accounts team when to schedule the payment run, and it tells you when you're allowed to start chasing.

The mistake most small businesses make isn't choosing the wrong number — it's not choosing at all, and letting the client assume whatever's normal in their world (which is often 30 or 60 days, because that's what big companies default to).

Net 7, net 14, net 30 — what each one means

Net 7 — due 7 days after the invoice date. Common for small jobs, tradies, and anyone dealing directly with the person who benefits from the work rather than a big accounts department.
Net 14 — due 14 days after the invoice date. A comfortable middle ground for freelancers and consultants; long enough that clients don't feel rushed, short enough that cash doesn't sit around for a month.
Net 30 — due 30 days after the invoice date. The default for larger companies with a fixed monthly payment run, and for industries like construction and wholesale where it's baked into contracts. It's a habit borrowed from big-business accounting, not a rule you have to follow.
Due on receipt — payable immediately. Normal for one-off small jobs, retail-style work, or anyone who wants to be paid before they leave the driveway.

There's nothing stopping you from inventing your own — net 10, net 21, whatever fits your cash flow. The number just needs to be clear and consistent so clients know what to expect from you every time.

Why shorter terms usually beat net 30

If you're a sole trader or small team, net 30 works against you. You did the work, you're carrying the cost of materials or your time, and then you wait a month before the money shows up — while your own bills (rent, GST, wages) don't wait a month for you.

As a rule of thumb: for jobs under a few thousand dollars, 7–14 days is completely normal, and clients rarely push back on it. Net 30 makes sense when you're dealing with a company whose accounts payable process genuinely only runs once a month — ask before assuming. There's no shame in emailing a new client "our standard terms are 14 days — let us know if that's a problem" before you even send the first invoice.

Due dates beat "net" language

Whatever term you choose, put an actual date on the invoice, not just the term. "Net 14" requires the reader to do maths from whatever date they notice the email; "Due 9 October 2026" requires nothing. People pay dates, not arithmetic. Most invoicing tools (including InvoiceCharlie) calculate and print the real date automatically once you set your default term.

How to word your payment terms

Keep it to one line, near the totals or in your standard footer:

"Payment due within 14 days of invoice date."
"Due on receipt. Bank transfer or card payment accepted."
"Net 30 per our agreement dated [date]. 2% late fee applies after 7 days overdue."

If you're adding a late fee or an early payment discount, say so on the invoice itself, not just in a contract the client signed six months ago and has since forgotten about. A number they can see is a number they act on.

What about late fees and early payment discounts?

Both are worth considering, and both work best when they're boring and predictable rather than aggressive.

A modest late fee (a flat amount, or a small percentage after a set number of days overdue) mostly works as a deterrent rather than real income — few clients ever actually pay it, because they pay before it kicks in. State it clearly and apply it consistently, or don't bother stating it at all. Whether you're legally allowed to charge one, and how, varies — check the rules for your situation with your accountant or a local small business advisor before you put a number on paper (this is different in New Zealand, Australia, the UK and elsewhere, and it can depend on what you agreed with the client upfront).

An early payment discount (say, 2% off if paid within 7 days instead of 30) can pull cash forward from slower clients, but it costs you margin on clients who would have paid on time anyway. It tends to work best for larger invoices, where getting the cash weeks earlier is worth more than the discount.

A simple rule of thumb for picking a term

Small job, direct client: due on receipt or net 7.
Ongoing client, freelance or consulting work: net 14.
Larger company with a fixed payment run, or a signed contract that specifies it: net 30, because you may not have a choice — but confirm it before you agree to the job, not after.
Anything that feels too long: ask. "Would 14 days work instead of 30?" costs you nothing and plenty of clients will simply say yes.

Put it in writing, and let the reminders do the rest

Whatever term you settle on, the real win isn't the number — it's using the same one every time, printing a real due date, and following up automatically the moment it passes. That last part is the one most small businesses skip, because chasing money feels awkward. A scheduled reminder on the due date and a firmer one a week later removes the awkwardness entirely, since it's a system doing the asking, not you.

If you're still writing invoices in a document and manually working out dates, InvoiceCharlie sets your default payment term once and calculates the due date on every invoice automatically, with reminders sent on your behalf. Your first 10 invoices are free, then $1 per invoice, never more than $12/month, or $99/year unlimited — see the pricing for details. Want to try it on a single invoice first? The free invoice generator needs no account at all.