Payment terms dictate when a client is expected to pay an invoice. Understanding these terms helps manage cash flow expectations.

Common Payment Terms

• PIA (Payment in Advance): Payment is required before any work begins or goods are delivered.
• Due Upon Receipt: Payment is expected immediately upon receiving the invoice.
• Net 15, Net 30, Net 60: Payment is due within 15, 30, or 60 days from the invoice date, respectively. Net 30 is the most common standard in B2B transactions.
• EOM (End of Month): Payment is due at the end of the month in which the invoice was issued.
• 2/10 Net 30: A 2% discount is offered if the invoice is paid within 10 days; otherwise, the full amount is due in 30 days.

Choosing the Right Terms

Shorter payment terms (like Net 15 or Due Upon Receipt) are generally better for small businesses and freelancers to maintain cash flow. However, larger corporate clients often have standard Net 30 or Net 60 policies that may be difficult to negotiate.