---
title: "Examples of payment terms on invoices, and when to use each"
description: "Invoice payment terms examples with definitions: Net 30, 2/10 Net 30, due on receipt, deposits and milestone billing, the exact wording to put on the invoice, and what to do when clear terms still get ignored."
url: https://www.paidnice.com/blog/examples-of-payment-terms-on-invoices
---

# Examples of payment terms on invoices: what to write and when to use each

Written by Denym Bird Co-founder & CEO of Paidnice

Reviewed by Ashley Schroder Co-founder of Paidnice

Updated Oct 16, 2026 · 8 min read Expert verified

## Summary

Invoice terms are the conditions on an invoice that state when and how a customer must pay, for example Net 30, a deposit, or a discount for paying early. The most common default is Net 30, with Net 7 to Net 90 as shorter or longer variants, and 2/10 Net 30 as the standard early-payment version.

- **Most common term:** Net 30 (payment due within 30 days) is the default most invoices use, with Net 7 and Net 15 for faster payers and Net 60 or Net 90 for longer trade credit.
- **Early payment incentive:** 2/10 Net 30 offers a 2% discount if the customer pays within 10 days, otherwise the full balance is due in 30 days.
- **The fix:** Paidnice applies late fees, interest and reminders on the ledger automatically in Xero and QuickBooks Online, so the terms on the invoice are the terms that actually get followed.

## What are payment terms on an invoice?

Payment terms on an invoice are the conditions that tell a customer how, when and where to pay, covering the due date, accepted methods and any early-payment or late-fee terms. Without them the customer does not know when payment is expected, which methods you accept, or what happens if the invoice is late.

A complete set of payment terms on an invoice states five things:

- Due date or timeframe for payment
- Accepted payment methods
- Early payment incentives (if any)
- Late payment penalties (if applicable)
- Where and how to make payment

See [how long customers in your industry actually take to pay](https://www.paidnice.com/payment-times) before you set your terms.

Free: Payment reminder email templatesCopy the reminder emails for before, on and after the due date.

## Common payment terms examples (with definitions)

The most common payment terms on invoices are Net 7 to Net 90, EOM, 2/10 Net 30, cash in advance, cash on delivery and due on receipt; the table gives each term, its full meaning and when it applies. Offering any of these terms is [trade credit](https://www.paidnice.com/blog/trade-credit).

| Term | Full Meaning | Description |
| --- | --- | --- |
| **Net 7** | Payment due in 7 days | Full payment is expected within 7 days of invoice date |
| **Net 10** | Payment due in 10 days | Full payment is expected within 10 days of invoice date |
| **Net 15** | Payment due in 15 days | Full payment is expected within 15 days of invoice date |
| **Net 30** | Payment due in 30 days | Full payment is expected within 30 days of invoice date |
| **Net 60** | Payment due in 60 days | Full payment is expected within 60 days of invoice date |
| **Net 90** | Payment due in 90 days | Full payment is expected within 90 days of invoice date |
| **EOM** | End of Month | Payment due by the end of the month in which the invoice was issued |
| **21 MFI** | 21st Month Following Invoice | Payment due on the 21st of the month following the invoice date |
| **2/10 Net 30** | 2% discount if paid within 10 days | Offers a financial incentive for early payment |
| **CIA** | Cash in Advance | Payment required before goods or services are delivered |
| **PIA** | Payment in Advance | Similar to CIA, requiring upfront payment |
| **COD** | Cash on Delivery | Payment required at the time goods are delivered |
| **CBS** | Cash Before Shipment | Payment must be received before items are shipped |
| **CND** | Cash Next Delivery | Payment for the previous order due upon delivery of next order |
| **CWO** | Cash With Order | Payment must accompany the order |
| **Letter of Credit (LC)** | Documentary credit confirmed by a bank | Common in international trade to reduce payment risk |
| **Upon Receipt** | Due immediately upon receiving invoice | Expects immediate payment with no grace period |

## What should payment terms wording look like on an invoice?

Payment terms wording should name the term, the due date and any discount or fee in one line, for example "Net 30: payment due within 30 days of invoice date." Most accounting software has a dedicated payment terms field; the wording below fits that field or the invoice footer.

- **Standard net terms:** Payment Terms: Net 30. Payment is due within 30 days of invoice date. Please remit payment by [due date].
- **Early payment discount:** Payment Terms: 2/10 Net 30. Save 2% by paying within 10 days of invoice date. Otherwise, full payment is due within 30 days.
- **Advance payment:** Payment Terms: Payment in Advance (PIA). Full payment required before work will commence.
- **Recurring services:** Payment Terms: Net 15, Recurring Monthly. Payment for each month's services is due within 15 days of invoice date. Automatic payments are available.
- **Late payment fee:** Payment Terms: Net 30 + Late Fee. Payment is due within 30 days of invoice date. Overdue accounts are subject to a 1.5% monthly late fee (18% per annum).

Next to the terms, the payment instructions remove the excuses for paying late. Include a specific due date ("Payment due by 15 February" is clearer than "Net 30"), every accepted method, the bank account or payment portal link, a named contact for payment questions, and the late payment consequence. The UK statutory rate is Bank of England base rate plus 8% a year, and a contract rate much higher than that is more likely to be challenged as a penalty.

## What is a good payment term for your business?

A good payment term depends on industry norms, your cash flow needs and your bargaining position, with shorter terms and deposits protecting a business that carries high costs. Four checks settle it:

- **Industry standard.** Construction often uses Net 30 to Net 60 with milestone payments, while retail and food services expect immediate payment.
- **Cash flow requirements.** High overhead or inventory costs call for Net 7 to Net 15. Shorter terms cost little in bad debt: Paidnice data shows [the same customer pays a 14-day invoice 9 days sooner than a 30-day invoice](https://www.paidnice.com/blog/payment-terms-statistics), with no rise in unpaid invoices. See [our payment terms data](https://www.paidnice.com/blog/payment-terms-statistics#net-14-vs-net-30).
- **Customer payment history.** Long-standing customers with a clean record can carry more flexible terms than new clients. For a new client with no history, [check their payment record](https://www.paidnice.com/blog/check-customer-payment-record) before you agree 30-day terms. Paidnice rates each customer internally from 0 to 100 based on their own payment history, so a good-payer discount or a shorter-terms flag for a slow payer is not a guess.
- **Bargaining position.** A unique, high-demand service supports stricter terms than a crowded market does.

## Which payment terms improve cash flow fastest?

Early payment discounts, progressive billing, upfront deposits, shorter default terms and automated follow-up are the five levers that pull cash forward fastest.

1. **Offer an early payment discount.** A 2% discount for payment within 10 days (2/10 Net 30) equals an annualised return of about 36.7% on the 20 days of credit you give up, which is why large customers take it.
2. **Bill progressively.** Milestone payments on long projects keep cash arriving through the job instead of at the end.
3. **Take a deposit from new customers.** A 30% to 50% deposit until a payment history exists.
4. **Shorten the default term.** Moving from Net 30 to Net 15 or Net 10 works because most customers pay to the stated term, whatever it is.
5. **Automate the follow-up.** Reminders, statements and fees applied on the same schedule for every customer.

## What is the difference between payment terms and full terms and conditions?

Payment terms are the due date and discount rules; full terms and conditions add late-payment interest, dispute windows, ownership and governing law, usually needed for larger contracts. For copy-ready clauses covering all of those, use the [payment terms and conditions templates](https://www.paidnice.com/blog/payment-terms-and-conditions-templates). The sample below shows how the two fit together on one invoice:

> **TERMS AND CONDITIONS** 1. PAYMENT: Payment is due within 30 days of invoice date. We accept credit cards, ACH transfers, and checks. 2. LATE PAYMENT: Overdue accounts are subject to a monthly interest charge of 1.5% (annual rate of 18%). 3. DISPUTED CHARGES: Any questions or disputes regarding this invoice must be submitted in writing within 7 days of receipt. 4. RETURNS/CANCELLATIONS: Returns or cancellations must be requested within 14 days and may be subject to a 15% restocking fee. 5. OWNERSHIP: Title to products remains with [Company Name] until payment is received in full. 6. COLLECTION COSTS: Customer agrees to pay all reasonable collection costs, including legal fees, in the event of non-payment. 7. GOVERNING LAW: This agreement is governed by the laws of [Your State/Country].

## Why do clear payment terms still not get you paid on time?

Clear payment terms fail on their own because most businesses have no systematic follow-up process, not because the wording is unclear. According to the [2023 MYOB Business Monitor](https://info.myob.com/hubfs/Media%20Centre/MYOB%20Business%20Monitor%20June%2020232.pdf), 59% of overdue invoices need three or more follow-ups before they are paid.

**Clear terms still get few payments on the day.** Only about 13 in 100 paid invoices are paid on the due date itself. More arrive in the week after it (about 19 in 100).
Original dataSource: our analysis of invoice data from over 1,000 Paidnice customers. See when customers actually pay.

An automated accounts receivable process does five things the same way on every invoice:

1. Sends the invoice immediately.
2. Triggers payment reminders at set intervals before and after the due date.
3. Applies the stated late fee or interest on the ledger when the due date passes.
4. Escalates in the same order for every customer.
5. Tracks how long each customer takes to pay.

## What payment term mistakes cost you money?

Three mistakes in the terms above cost days or invoices. Two smaller ones are fine print and terms first shown on the invoice: put the terms near the total, and agree them on the quote or contract.

- **Using EOM on an invoice sent late in the month.** As the table above defines EOM, an invoice issued on 29 October is due on 31 October, 2 days later. The same invoice on Net 30 is due on 28 November, 30 days later. A customer who expects 30 days sees it overdue after 2.*Fix: write the due date itself, such as "Payment due by 28 November".*
- **Giving every new customer the same long term.** Customers who pay their first invoice on time pay about 73 in 100 of later invoices on time. If the first invoice is paid 1 to 14 days late, that falls to about 39 in 100.*Fix: start a new customer on Net 15 or a deposit, then move to Net 30 after one invoice is paid on time.*Source: our analysis of invoice data from over 1,000 Paidnice customers. See [warning signs of a late payer](https://www.paidnice.com/blog/late-paying-customers-warning-signs#first-invoice).
- **Writing a late fee and then waiving it.** The 1.5% monthly fee in the wording above is $75 a month on a $5,000 invoice ($5,000 × 0.015). About 1 in 4 late fees is waived, and about 6 in 10 are paid in full.*Fix: apply the fee on one rule for every customer, and waive it on purpose, not by default.*Source: our analysis of invoice data from over 1,000 Paidnice customers. See [our late fee data](https://www.paidnice.com/blog/do-late-fees-work#paid-or-waived).

## How do payment terms differ by industry?

Payment terms vary by industry: professional services often use a retainer plus Net 15 to Net 30, construction uses milestone billing with retention, retail expects immediate payment, and manufacturing runs Net 30 to Net 60. Agencies on retainers can see [accounts receivable software for marketing and creative agencies](https://www.paidnice.com/industries/agencies).

| Industry | Typical term | Example wording |
| --- | --- | --- |
| Professional services | Retainer plus Net 15 to Net 30 | 50% retainer due before project commencement, with the remaining 50% due Net 15 on completion. |
| Construction | Milestones, Net 30 to Net 60, retention held | 30% on contract signing, 30% on completion of framing, 30% on installation, 10% Net 30 after final inspection. |
| Retail and wholesale | Immediate; Net 30 for approved accounts | Due immediately for retail customers. Approved wholesale accounts: Net 30. |
| Manufacturing | Net 30 to Net 60 with volume terms | Net 45. Orders exceeding $10,000 qualify for Net 60. |

The typical term and the actual wait are two different numbers. Xero Small Business Insights shows how long small businesses in the same industries waited to be paid in June 2026, from invoice to payment:

Manufacturing waits longest of the five in every market, which fits its Net 30 to Net 60 terms. Retail is the fastest.

For construction retention terms, see [progress claims and retentions in Xero](https://www.paidnice.com/blog/progress-claims-retentions-xero). Contractors can chase claims with [accounts receivable software for construction](https://www.paidnice.com/industries/construction).

*Clear terms still need enforcing. [Paidnice](https://www.paidnice.com/) enforces your payment terms in [Xero](https://www.paidnice.com/xero) and [QuickBooks](https://www.paidnice.com/quickbooks) by automating reminders, statements and late fees, so the terms on the invoice are the terms the customer keeps.*

## Paidnice features in this article

- [**Email and SMS reminders** Sends reminders by email and SMS on your schedule, each with a link to pay.](https://www.paidnice.com/email-sms-reminders)
- [**Customer statements** Sends branded customer statements on your schedule, with one button to pay.](https://www.paidnice.com/automated-customer-statements)
- [**Late fees and interest** Adds late fees and interest to overdue invoices when you turn them on.](https://www.paidnice.com/late-fees)

## About the editorial team

Written by Denym Bird Co-founder & CEO of Paidnice

Denym started Paidnice in 2022 after customers paying late left his own business short on payroll. He has led it to $1 billion collected on time across more than 1 million invoices, and writes about credit control, late fees and getting paid on Xero and QuickBooks.

Reviewed by Ashley Schroder Co-founder of Paidnice

Ashley is a co-founder and lead developer of Paidnice and has built accounting software for more than 10 years. He builds the ledger connections that put reminders, late fees and payments into Xero, QuickBooks and ERPs such as NetSuite and Business Central. Before Paidnice he co-founded A2X, ecommerce accounting software for Xero and QuickBooks.

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