When you start your own business, you suddenly have to learn corporate accounting jargon. The most common phrase you'll hear from clients is "Our standard terms are Net 30."
But what does that actually mean, and should you accept it?
What "Net" Terms Actually Mean
"Net" refers to the number of days a client has to pay an invoice after the issue date before it is considered late.
- Due on Receipt: Payment is expected immediately (usually within 24-48 hours).
- Net 15: The client has 15 days to pay.
- Net 30: The client has 30 days to pay.
- Net 60 / Net 90: The client has 60 or 90 days to pay (common in large enterprises).
The Danger of Net 30 for Freelancers
Imagine you work on a project for the entire month of October. You finish on October 31st and send the invoice. If the terms are Net 30, the client doesn't have to pay you until November 30th.
That means you did the work in early October, but you aren't seeing the cash until late November. That is a two-month cash flow gap. For a small business or solo freelancer, that gap can make it difficult to pay your own rent or software subscriptions.
How to Set Your Own Terms
Just because a corporation says "our standard terms are Net 30" doesn't mean you have to accept it. You are a business, too.
For Projects Under $2,000: Due on Receipt
Small, quick projects should be paid quickly. There is no reason an accounting department needs 30 days to process a $500 logo tweak.
For Standard Projects: Net 15 or Net 14
This is the sweet spot. It gives the client's accounting team two weeks to run the invoice through their approval process, but it gets cash in your pocket relatively quickly.
The Ultimate Protection: Upfront Deposits
Never rely entirely on backend payment terms. If you are starting a $10,000 web build, structure it as:
- 50% Upfront (Required before work begins)
- 25% at Milestone 1 (Net 15)
- 25% at Final Delivery (Net 15)
This ensures that even if the final payment is delayed, you have cash flow to cover your time during the project.
How to Push Back on Net 60
If a massive enterprise insists they can only do Net 60, you have two choices:
- Walk away: If you can't float the cash, don't take the job.
- The Finance Charge: Say, "I can accommodate Net 60, but because I am a small agency, I have to add a 5% financing fee to the project total to cover the extended cash flow gap. Alternatively, we can do Net 15 at the current proposed rate." Often, they will miraculously find a way to do Net 15.
No matter what terms you agree on, make sure they are clearly printed on your invoices. Invoicease allows you to set default payment terms so every invoice you generate automatically calculates the correct due date.