Payment terms explained: net 30, net 15, deposits, late fees

Payment terms are the rules on your invoice that say when the client must pay, how much is due before work starts, and what late payment costs them. The terms that get you paid fastest are short ones (net 7 to net 15), a deposit up front, and an online payment button on the invoice.

Late payment is the normal state of small business, not the exception. In the United States, Atradius reports that 43% of credit-based B2B sales are overdue. The 2025 Intuit QuickBooks late payments report, a survey of 2,487 US small businesses, found that 56% had outstanding invoices, owed $17,500 on average, and that 47% had invoices more than 30 days overdue. Your terms are your first defence.

What net 30 and the other terms mean

A payment term is a deadline in shorthand. Learn the handful below and you can read almost any invoice.

• Due on receipt means payment is expected the day the invoice lands. It suits small, one-off jobs.
• Net 7, net 15 and net 30 give the client 7, 15 or 30 days from the invoice date to pay the full amount.
• Net 30 EOM means 30 days from the end of the month the invoice was issued. It is common with larger companies that run monthly payment cycles, and it is slower than plain net 30.
• 2/10 net 30 gives a 2% discount for paying within 10 days, with the full amount due in 30. It helps when a client's own process is slow but their finance team responds to a small reward.

Net 30 became the default because it suited big companies with accounts payable departments, not a studio that needs cash this month. You do not have to inherit it. Shorter terms are the easiest change most people can make, and the data supports it. In a FreshBooks sample of real invoices, work billed on 7-day terms was paid within a week 58% of the time, against 40% for 30-day terms.

Same work, same kind of client. The number on the invoice changed the outcome. For project work, net 15 is a sensible default. It looks professional, protects your cash and gives an organized client room to process payment.

Deposits are the biggest lever you have

If you change one thing this year, take a deposit. It moves money before the risky stretch between "we agreed" and "the work is done and I am waiting".

A common structure is 50% before you start and 50% on delivery. For longer jobs, some people take a third up front, a third at the midpoint and a third on completion. The exact split matters less than the principle: the client commits real money before you commit real hours.

That filters out clients who were never going to pay, and it caps a slow payer at owing you half. It also changes the mood. Chasing the second half of an invoice is a different conversation from chasing the whole thing from zero. If you have never asked before, our guide to collecting a deposit before a project covers the wording and the timing.

State the deposit as a condition, not a request. "Work begins when the 50% deposit is received" is a sentence, not a negotiation. Put it in the quote, repeat it in the contract and print it on the first invoice.

Milestone billing for bigger projects

For anything longer than a few weeks, bill in milestones instead of waiting for one payment at the end. Tie each payment to a deliverable the client can see, such as an approved wireframe, a first draft, a staging build or a launch.

Milestones keep cash coming in while work is in progress, so you are never carrying months of unpaid labour. They also cap your exposure. If a client goes quiet after milestone two, you have been paid for one and two and you can stop before three.

Write each milestone into the agreement with a plain description and an amount, so nobody argues later about what "phase one" included. Our milestone payment schedule guide explains how to size each stage and what to do when a client wants to move one.

Make paying easy

Terms only work if paying is frictionless. When a client has to look up bank details, open a banking app and type a reference, your invoice joins the pile of things they will do later, and later is where invoices stall.

Put a pay button on the invoice. When the payment option sits on the invoice itself, the client can act the moment they read it. PYMNTS reports that nearly 73% of businesses have yet to automate supplier payments, so a lot of payment friction is still manual and paper-based. Every step you remove between "sees the invoice" and "pays it" shortens your wait.

Offer the methods your clients already use: card, and a wallet where your gateway supports it. People pay with what is in front of them.

Late fees, worded so they hold

A late fee only helps if it exists before the payment is late. Announced afterwards, it reads as a penalty the client can dispute. Written into the contract they signed, it is a term they agreed to.

A common structure is a flat fee, or interest on the overdue balance, stated on the invoice and in the agreement. In the UK, the government says the statutory rate for business-to-business late payments is 8% plus the Bank of England base rate. Other countries have their own rules, and some cap what you can charge, so check the limits where you and your client operate, and ask your lawyer if the sums are large.

The aim is rarely the extra money. A visible late fee reframes your invoice as a bill with consequences rather than a polite suggestion, and that moves you up a client's payment queue.

None of this replaces a direct conversation when a client has gone past due. Our guide to handling late-paying clients covers the escalation in order. The problem is common enough to plan for. The GoCardless and FSB 2025 report, based on 2,298 small business responses, found that 45% of firms see more late payments than a year ago, 24% receive payments up to 60 days late, and 52% forfeit late payments up to 10 times a year to avoid the cost of chasing them. Terms that hold keep you out of that last group.

How Delivvo puts your terms on every document

Delivvo gets the deposit paid before work starts by attaching your terms to a quote, a contract and an invoice that the client opens from a single link.

Here is the flow:

1. Build a quote from your packages and add-ons, with the deposit and balance stated up front.
2. On the Pro plan, the client uses the one-page close. They pick, sign and pay the deposit in a single visit, and Delivvo creates the client, project, contract, invoice and payment schedule for you.
3. For larger jobs, set a payment schedule of up to 12 payments, each tied to a milestone or a date.
4. Each invoice gets a sequential number in your own format and carries your terms in plain words.
5. If a payment goes late, an automation sends reminders at 7, 14 and 30 days, and it stops the moment the invoice is paid.

The client pays through your own gateway. Delivvo connects to your own processor, such as Stripe, PayPal or Square, takes 0% of every payment and never acts as the merchant of record. The money goes from your client to you.

That matters for terms in a particular way, and it saves you a few admin jobs. You do not retype a deposit amount into three documents, and you do not have to remember which invoices need a reminder. The terms are set once and follow the client through the whole job. The late fee, the deposit and the milestone dates sit inside the signed contract, and every invoice and contract carries a verification code the client can check. When you chase an overdue balance, you are pointing at something they signed. Learn more about payment schedules and how payments work.

Read more about how payments work, or start with the CRM and client portal.

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