The Hidden Power of Payment Terms
Most freelancers and small business owners treat payment terms as an afterthought. But the right payment terms can dramatically reduce late payments, improve cash flow, and protect you from non-payment.
Common Payment Term Options
Net 30, Net 15, Net 7
"Net 30" means payment is due 30 days after the invoice date. Net 15 and Net 7 are faster options. For new clients or smaller projects, Net 15 or Net 7 is often more appropriate.
50% Upfront
Requiring a deposit before starting work is the single best way to ensure you get paid. It also filters out clients who aren't serious.
Upon Delivery
Payment due when the final deliverable is delivered. Works well for smaller projects with clear completion milestones.
Milestone-Based
Payment tied to specific project milestones. Ideal for long-term projects where you need cash flow throughout the engagement.
Late Payment Fees
Including a late payment fee in your invoice is one of the most effective ways to encourage timely payment. Common structures:
- 1.5% monthly on overdue balance (18% annually)
- 2% monthly for higher-risk clients
- Flat fee (e.g., $50 after 30 days)
Early Payment Discounts
Consider offering a small discount for early payment: "2/10 Net 30" means a 2% discount if paid within 10 days, otherwise full amount due in 30 days.
Generate Professional Invoices
DraftDesk generates professional invoices with clear payment terms, late fee provisions, and all the information needed to get paid on time.