Choosing the right payment terms affects your cash flow, client relationships, and administrative overhead. Net 30 is the industry standard for corporate clients, but Net 15 can improve cash flow for small businesses.
Compare the pros and cons of each term structure, learn how to negotiate terms with clients, and understand industry-specific norms. Includes tips for implementing late payment policies.
The payment terms you choose affect your cash flow more than most freelancers realize. With Net 30 terms, a client who receives your invoice on January 1 has until January 31 to pay. If you invoice on the last day of the month, you may not see that payment for nearly 60 days. Net 15 terms compress this window significantly, which can make a meaningful difference when you are covering monthly expenses like rent, software subscriptions, or contractor payments. Some industries have standard expectations: corporate clients in the US often expect Net 30, while small businesses and startups may prefer Net 15. If you are unsure which terms to offer, start with Net 15 and offer Net 30 as a negotiation point when clients push back. A late payment penalty clause of 1.5 to 2 percent per month on overdue balances is standard in many jurisdictions, and including it in your terms gives you leverage without damaging the relationship.