How to Write Payment Terms on an Invoice

Payment terms on an invoice tell the buyer when payment is due, how to pay, what an early-payment discount is worth, and what happens if payment is late. Writing them out removes the guesswork the buyer would otherwise have to do, and it matters more than it looks: when a contract fixes no payment date, the late-payment laws supply one, and it is rarely the date the seller had in mind.

The core elements of invoice payment terms

A complete set of payment terms covers four things: the due date, the accepted payment methods, what happens on late payment, and any early-payment discount.

Due date. Write the term and the date it produces. "Net 30" asks for the full amount within 30 days; this site's calculators read a bare Net term as calendar days, and the Net 30 guide explains why the term alone does not settle calendar or business days. "Net 30 EOM" counts the 30 days from the end of the invoice month. "Due on receipt" asks for payment when the invoice arrives. The guides on Net 15, Net 45, Net 60 and Net 90 cover the other common terms.

Payment methods. List the methods you accept, such as bank transfer, card or a payment link, with the account details the buyer needs.

Late payment. State the rate you charge and when it starts, for example "interest at the rate agreed in our contract on balances unpaid after the due date", and put the rate itself in the contract. In the EU and the UK the law also gives a creditor interest and a fixed sum for recovery costs without any clause: Directive 2011/7/EU entitles the creditor to interest for late payment without a reminder and to a fixed sum of at least EUR 40, and the UK Late Payment of Commercial Debts (Interest) Act 1998 adds a fixed sum of 40, 70 or 100 pounds by size of debt once statutory interest runs.

Early-payment discount. If you offer one, write it in the standard notation and in words: "2/10 Net 30", meaning 2% off if paid within 10 days, the full amount otherwise due in 30. Skipping that discount costs the buyer about 37.2% a year; the 2/10 Net 30 guide shows the arithmetic.

Standard payment term notation

What the law supplies when the invoice says nothing

If neither the contract nor the invoice fixes a payment date, the late-payment laws fall back to 30 days, counted from receipt rather than from the invoice date: 30 calendar days after the buyer receives the invoice under Article 3(3)(b) of Directive 2011/7/EU, a 30-day period beginning with the later of performance and notice of the amount under section 4 of the UK Act, and, for US federal contracts, the 30th day after the billing office receives a proper invoice under FAR 32.904. A term on the invoice replaces those defaults with a date the buyer can read, which is why it should appear there and in the contract.

Where to put payment terms on the invoice

Payment terms belong in two places: in your contract or client agreement, agreed before the work begins, and on the invoice itself, as a reminder of what was agreed. On the invoice, put them next to the total, together with the invoice date and the due date the term produces, so the buyer does not have to do the arithmetic.

To find the exact due date from any invoice date, use the Net 30 calculator, the Net 60 calculator or the invoice due date calculator, which also shows when the due date falls on a weekend or holiday.

Mistakes worth avoiding

Terms that appear only on the invoice. Agree the terms in the contract before you start work and restate them on the invoice, so the two documents say the same thing.

Calendar or business days left open. "Net 30" does not say which it means. If your contract could be read either way, write "30 calendar days" or "30 business days"; on a Monday-to-Friday week, 30 business days counted from a working day are 42 calendar days, and more with a public holiday inside.

No date for the weekend case. A due date can land on a Saturday, a Sunday or a public holiday. Say whether payment on the next business day is on time; the weekend and holiday guide covers the rules that apply when the contract is silent.

FAQ

Do I have to put payment terms on every invoice?

Writing them is how the buyer learns the date you expect. Where a contract and invoice fix no payment date, the late-payment laws supply one: 30 calendar days after receipt of the invoice under Directive 2011/7/EU, a 30-day period from performance or notice under the UK Late Payment Act, and the 30th day after receipt of a proper invoice for US federal contracts under FAR 32.904.

What does 2/10 Net 30 mean on an invoice?

It means the buyer can take a 2% discount if they pay within 10 days; otherwise the full amount is due in 30 days. The "2" is the discount percentage, "10" is the discount window in days, and "30" is the full payment deadline.

Can I add late fees to an invoice?

You can state a late-payment rate, and the contract is the place to agree it first. In the EU and the UK the law also gives a creditor late-payment interest and a fixed sum for recovery costs without a clause: at least EUR 40 under Article 6 of Directive 2011/7/EU, and 40, 70 or 100 pounds by size of debt under section 5A of the UK Late Payment Act. The late payment interest calculator computes the interest over the days overdue.