How to Write Payment Terms on Invoices (With 15 Examples)

What Are Invoice Payment Terms?

Payment terms specify when and how a client should pay your invoice. Clear payment terms prevent confusion, reduce late payments, and protect your business legally.

Essential Components of Payment Terms

• Due date: When payment is expected
• Payment methods: How clients can pay
• Late fees: Penalties for overdue payments
• Early payment discounts: Incentives for fast payment
• Deposit requirements: Upfront payments (if applicable)

15 Payment Terms Examples

1. Net 30

Meaning: Payment due within 30 days of invoice date

Example wording: "Payment is due within 30 days of invoice date. Invoice date: January 15, 2025. Due date: February 14, 2025."

Best for: B2B transactions, established clients

2. Net 15

Meaning: Payment due within 15 days

Example wording: "Payment due within 15 days. Please remit payment by January 30, 2025."

Best for: Smaller projects, faster cash flow needs

3. Net 60

Meaning: Payment due within 60 days

Example wording: "Payment terms: Net 60. Payment due by March 15, 2025."

Best for: Large corporations with slow payment processes

4. Due on Receipt

Meaning: Payment expected immediately

Example wording: "Payment is due upon receipt of this invoice. Please remit payment immediately."

Best for: Small purchases, new clients, cash businesses

5. Due Before Service

Meaning: Payment required before work begins

Example wording: "Full payment required before project commencement. Work will begin upon receipt of payment."

Best for: New clients, risky projects, custom work

6. 50% Deposit, Balance on Completion

Meaning: Half upfront, half when finished

Example wording: "50% deposit ($2,500) due before project start. Remaining balance ($2,500) due upon project completion."

Best for: Large projects, custom work, new clients

7. Progress Payments

Meaning: Payments at project milestones

Example wording: "Payment schedule: 25% upon signing ($5,000), 25% at design approval ($5,000), 25% at development completion ($5,000), 25% at final delivery ($5,000)."

Best for: Long-term projects, construction, large contracts

8. 2/10 Net 30

Meaning: 2% discount if paid within 10 days, otherwise due in 30

Example wording: "Take 2% discount if paid within 10 days (pay $980 by January 25). Otherwise, full amount of $1,000 due by February 14."

Best for: Encouraging fast payment, B2B sales

9. End of Month (EOM)

Meaning: Payment due by the end of the month

Example wording: "Payment terms: EOM. Payment due by January 31, 2025."

Best for: Monthly billing cycles, subscription services

10. Cash on Delivery (COD)

Meaning: Payment when goods/services delivered

Example wording: "Payment due upon delivery. Cash, check, or credit card accepted at time of delivery."

Best for: Product delivery, service completion, new clients

11. Recurring Monthly

Meaning: Automatic monthly billing

Example wording: "Monthly recurring payment of $500 will be automatically charged on the 1st of each month."

Best for: Subscriptions, retainers, ongoing services

12. Net 30 with Late Fees

Meaning: 30 days to pay, penalties after

Example wording: "Payment due within 30 days. Late fee of 1.5% per month (18% annually) will be applied to overdue balances."

Best for: Protecting against late payments

13. Installment Plan

Meaning: Payment split into equal parts

Example wording: "Total amount: $6,000. Payment plan: 6 monthly installments of $1,000 due on the 15th of each month."

Best for: Large purchases, accommodating clients

14. Letter of Credit

Meaning: Bank guarantees payment

Example wording: "Payment via irrevocable letter of credit from a U.S. bank. Payment due upon presentation of shipping documents."

Best for: International trade, large transactions

15. Upon Milestone Completion

Meaning: Payment when specific goals met

Example wording: "Payment of $10,000 due upon completion and client approval of website design mockups."

Best for: Project-based work, clear deliverables

How to Choose the Right Payment Terms

Consider these factors:

• Cash flow needs: How quickly do you need payment?
• Client relationship: New vs established clients
• Industry standards: What's normal in your field?
• Project size: Larger projects may need deposits
• Risk level: Higher risk = stricter terms

Best Practices for Payment Terms

1. Be specific: Include exact dates, not just "Net 30"
2. Discuss upfront: Agree on terms before starting work
3. Put in writing: Include in contracts and invoices
4. Be consistent: Use the same terms for similar clients
5. Make them visible: Bold or highlight payment terms on invoices
6. Offer options: Multiple payment methods increase payment speed

Legal Considerations

Important notes:

• Late fees must comply with state usury laws (typically 18% max annually)
• Payment terms should be agreed upon before work begins
• Include terms in both contracts and invoices
• Some industries have regulated payment terms

Sample Complete Payment Terms Section

Example for invoice:

PAYMENT TERMS

Payment is due within 30 days of invoice date (due by February 14, 2025).

Accepted Payment Methods:
• Bank transfer to [account details]
• PayPal: payments@yourbusiness.com
• Check payable to [Business Name]

Late Payment: A late fee of 1.5% per month will be applied to overdue balances.

Early Payment Discount: Pay within 10 days and receive 2% discount.

Conclusion

Clear payment terms are essential for getting paid on time and maintaining professional client relationships. Choose terms that protect your business while being fair to clients. Use InvoiceKit to create professional invoices with clear, customizable payment terms!