Payment Terms Explained: Net 30, Deposits, and Late Fees
5 min read · Free template included
The payment terms on your invoice quietly decide how fast you get paid. "Net 30" with no deposit and no late fee is an invitation to be paid last. A few small choices — clearly stated up front — make a real difference to your cash flow.
What "Net 30" (and Net 15, Net 60) means
"Net 30" means payment is due 30 days after the invoice date. "Net 15" is 15 days, "Net 60" is 60 days, and so on. Shorter terms get you paid faster, so unless a client requires longer terms, Net 14 or Net 15 is a reasonable default for freelancers and small contractors. Always state the terms on the invoice and in the contract — don't leave it to assumption.
Deposits: get paid before you start
A deposit (also called a retainer or down payment) is money paid up front before work begins. For project work, 25–50% up front is standard. A deposit does two things: it covers you if the client backs out, and it filters out clients who were never serious. For larger projects, structure payments into milestones — for example, a third up front, a third at the midpoint, and a third on delivery.
Late fees that actually work
A late fee gives clients a reason to pay on time. A common structure is 1.5% per month (18% annualized) on overdue balances, stated clearly on the invoice and in your contract. The point usually isn't to collect the fee — it's to make on-time payment the path of least resistance. Check your local rules, since some jurisdictions cap interest rates.
Other terms worth knowing
- Due on receipt. Payment expected immediately. Best for small jobs or new clients.
- 2/10 Net 30. A 2% discount if paid within 10 days, otherwise due in 30. An incentive for early payment.
- Milestone billing. Payments tied to project stages rather than one lump sum at the end.
Put it on a clean invoice
State your terms in plain language: the due date, any deposit, and the late fee. SignedDocu's free invoice generator includes payment terms, due dates, and itemized line items — create a professional invoice in about 30 seconds.
Skip the blank page — generate it free
Open the free template →Frequently asked questions
What does Net 30 mean on an invoice?
Net 30 means the full payment is due 30 days after the invoice date. Variations like Net 15 or Net 60 simply change the number of days. Shorter terms get you paid faster.
How much deposit should I ask for?
For project work, 25–50% up front is standard. A deposit protects you if the client backs out and confirms they're serious. Larger projects are often split into milestone payments.
Can I charge a late fee on overdue invoices?
Yes, as long as it's stated in your contract and on the invoice. A common late fee is 1.5% per month on the overdue balance. Check local regulations, since some places cap interest rates.
More guides
Ready to create your document?
Free to try. No credit card. Done in about 30 seconds.
Get the free template →