Invoice Payment Terms: Net 30, Due on Receipt and Late Fees

The common payment terms

Payment terms are part of your deal with the client. They belong in the quote or contract before the work starts, and then again on every invoice. These are the ones you see most often:

Term	What it means
Due on receipt	Pay as soon as you get the invoice. No grace period is written in.
Net 7, net 14, net 30	The full amount is due 7, 14 or 30 days after the invoice date.
Net 60, net 90	The same with a longer wait. In the EU and UK, business terms over 60 days have to be expressly agreed and fair to the supplier (see below).
2/10 net 30	Take 2% off if you pay within 10 days, otherwise the full amount is due in 30.
Deposit, then balance	Part of the price before work starts, the rest on delivery or by a due date.

"Net" means the whole amount, with no discount taken. The word is the same everywhere; the day you count from is not. Some clients count from the invoice date, some from the day they received it, and EU law counts from receipt when nothing was agreed. The simplest fix is to print the actual date. The invoice generator works out the due date from the terms you pick and prints it on the invoice.

Counting the due date

Terms are counted in calendar days, weekends included; the EU directive's default periods, for example, are written as 30 calendar days. For an invoice dated Tue, October 20, 2026:

Terms	Due date
Net 7	Tue, October 27, 2026
Net 14	Tue, November 3, 2026
Net 30	Thu, November 19, 2026
Net 45	Fri, December 4, 2026
Net 60	Sat, December 19, 2026
Net 90	Mon, January 18, 2027

Net 60 lands on a Saturday here. Whether a payment that arrives the following Monday counts as late is a question for your contract, so if it matters to you, write the date out and avoid the doubt.

What applies when you agreed no terms

If neither the contract nor the invoice sets a date, the law fills the gap in some places:

EU, between businesses. Article 3 of Directive 2011/7/EU entitles you to interest 30 calendar days after the customer receives the invoice. If the receipt date is uncertain, or the invoice arrived before the goods or services, the 30 days run from when the customer received those.
UK, between businesses. GOV.UK says the payment is late 30 days after the customer gets the invoice or you deliver the goods or service, whichever is later.
US federal agencies. Under the Prompt Payment rules in 5 CFR 1315.4, an agency's payment is due 30 days after it receives a proper invoice when the contract names no date and no discount is taken.
US, between private businesses. There is no federal rule that sets a default. What you agreed with the client, and the contract law of the state that governs the deal, decide it. That is one more reason to agree the terms in writing up front.

How long a business client may take

In the EU, Article 3(5) of the directive says a payment period fixed in a contract between businesses must not exceed 60 calendar days, unless the contract expressly agrees otherwise and it is not grossly unfair to the creditor. Public authorities get 30 days, extended up to 60 only for certain public undertakings and healthcare bodies, and never more than 60. GOV.UK states the same pattern for the UK: an agreed date must usually be within 30 days for public authorities and 60 days for business transactions, and a longer period must be fair to both businesses.

The directive also treats some terms as grossly unfair by default. A contract term that excludes interest for late payment is grossly unfair, and one that excludes the compensation for recovery costs is presumed to be. National law can go further in the creditor's favor, since Article 12(3) lets member states keep or introduce rules that are more favorable to the creditor.

Early payment discounts: what 2/10 net 30 costs

A discount for paying early speeds up your cash, and it has a price. On a $5,000 invoice at 2/10 net 30, a client who pays by day 10 pays $4,900.00 instead of $5,000.00. You give up $100.00 to get the money 20 days sooner. As a yearly rate, the early payment discount calculator works it out like this:

Simple annual rate

d ÷ (100 − d) × 365 ÷ (Net days − Discount days)

2/10 net 30

2 ÷ 98 × 365 ÷ 20 = 37.24%

Compounded, as if the deal repeated back to back all year, it is 44.59%. The number is high because a small charge is paid for a short time. The days matter as much as the percentage:

Terms	Days paid early	Simple annual rate	Compound
1/10 net 30	20	18.43%	20.13%
2/10 net 30	20	37.24%	44.59%
2/10 net 45	35	21.28%	23.45%
2/10 net 60	50	14.90%	15.89%
1/15 net 60	45	8.19%	8.49%

For the client, taking the discount wins whenever the money costs them less than that rate. Borrowing $4,900.00 for 20 days at an example 8% a year costs about $21.48, against a $100.00 saving. For you, the same 37.24% is the cost of getting paid sooner. If 40% of $200,000 a year in sales took a 2% discount, it would cost you $1,600. Offer it when cash now is worth that much to you, for example when the alternative is an expensive credit line.

Late fees in the EU

The Late Payment Directive covers payments between businesses, including a sole trader, and from public authorities to businesses. It does not cover consumers. When a business client pays late, three things are owed without a reminder, as long as you have done your part and the delay is the debtor's fault:

Statutory interest, simple interest at the reference rate plus at least 8 percentage points, from the day after the due date. In euro countries the reference rate is the ECB's main refinancing rate in force on 1 January for the first half of the year and on 1 July for the second. Countries outside the euro use the equivalent rate of their central bank.
A fixed €40 as compensation for your own recovery costs, as a minimum.
Reasonable compensation for recovery costs above the €40, such as a lawyer or a collection agency.

Businesses can agree a different interest rate between themselves, subject to the grossly unfair test. With the ECB's main refinancing rate at 2.15% on 1 January 2026 and 2.40% on 1 July 2026, the directive's minimum in euro countries is:

Period	ECB reference rate	Minimum statutory interest
January to June 2026	2.15%	10.15%
July to December 2026	2.40%	10.40%

Your country's law can set more than the minimum, so check the national rate before you claim. Worked example: a €5,000.00 invoice due in the second half of 2026 is paid 45 days late. Interest is €5,000.00 × 10.40% × 45 ÷ 365 = €64.11, plus the fixed €40.00, for €104.11 in total.

Late fees in the UK

The Late Payment of Commercial Debts (Interest) Act 1998 gives a business that is paid late by another business statutory interest of 8% over the Bank of England base rate. The rate is fixed by the base rate in force on 31 December for interest that starts to run from January to June, and on 30 June for July to December. Bank Rate has been 3.75% since 18 December 2025, so statutory interest that starts in 2026 runs at 11.75%. GOV.UK notes that you cannot claim statutory interest if your contract sets a different rate.

On top of the interest, section 5A of the Act gives you a fixed sum once interest starts to run, plus your reasonable recovery costs above it:

Debt	Fixed sum
Less than £1,000	£40
£1,000 to less than £10,000	£70
£10,000 or more	£100

Worked example: £5,000.00 paid 45 days late. Interest is £5,000.00 × 11.75% × 45 ÷ 365 = £72.43, about £1.61 a day, and the fixed sum for a debt of that size is £70.00. GOV.UK suggests sending a new invoice if you decide to add the interest. You can also choose not to charge it.

Late fees in the US

The US has no federal counterpart to these rules for payments between private businesses: no federal statutory interest rate and no federal fixed recovery fee for a late invoice. Some states and cities have their own payment laws for certain kinds of work, so look up the rules where you and your client are. Otherwise a late fee or interest charge is something you agree in your contract or accepted terms, and state law limits it. States set their own maximum interest rates, often called usury laws, and they differ in amount and in which transactions they cover. Check your state's rule, or ask a lawyer, before you write a rate into your terms.

Federal agencies are the exception. The Prompt Payment Act of 1982 requires them to pay their bills on time and, in most cases, to pay interest when they pay a vendor late. The Bureau of the Fiscal Service publishes the rate; for July 1 to December 31, 2026 it is 4.75%. On a $5,000 invoice 45 days late, simple interest at that rate would be $29.28; the Fiscal Service's own calculators give the exact figure for a given case.

What has to be on the invoice

The rules depend on where you are and who the client is. Three primary sources spell it out:

UK. GOV.UK lists a unique identification number, your company name, address and contact information, the customer's company name and address, a clear description of what you charge for, the supply date, the invoice date, the amounts charged, VAT if applicable and the total owed. Sole traders add their name and an address for legal documents if they trade under a business name, and limited companies their full registered name. It also says an invoice must include when the customer must pay you.
EU VAT invoices. Article 226 of the VAT Directive lists the details required for VAT purposes: date of issue, a sequential number, your VAT number, the customer's VAT number when the customer pays the VAT, both names and addresses, what was supplied, the supply date if it differs, the taxable amount, the VAT rate and the VAT amount. Payment terms are not on that list. The late payment rules look at the date or period fixed in the contract, so agree them there and repeat them on the invoice. Cross-border cases have their own wording, covered in the EU reverse charge guide.
US federal agencies. 5 CFR 1315.9 defines a proper invoice: vendor name, invoice date, contract number, invoice number, description, price and quantity, shipping and payment terms, taxpayer identification number, banking information, a contact person and anything else the contract requires. The 30-day clock only starts when a proper invoice arrives.

For private clients in the US, no single federal list applies, but the same items make an invoice easy to pay: who you are, who pays, what for, how much, by when and how. The invoice generator has fields for all of them.

Choosing your terms

Agree them first. Put the terms, any deposit and any late fee in the quote the client accepts. Terms that first appear on the invoice are easier to dispute.
Print a date, not just "net 30". A date leaves no question about when the clock started.
Match the term to the risk. For a new client or a large job, ask for a deposit or bill in milestones, so you are never owed for all of the work at once.
Know your rights before you need them. In the EU and UK, interest and the fixed sum apply to business clients even if your contract is silent. In the US, only what you agreed applies.
Price your discount. If you offer 2/10 net 30, check its annual cost in the early payment discount calculator first.

If you are still setting the price itself, the freelance pricing guide works out an hourly, day and fixed price from your income goal. This guide is general information, not legal advice. National rules and your contract can change the answer for a specific invoice.

Frequently asked questions

What does net 30 mean on an invoice?

The full amount is due 30 days after the invoice date. "Net" means the whole amount, with no discount. Because people count from different dates, the clearest invoice also prints the actual due date, such as "Due November 19, 2026" on an invoice dated October 20, 2026.

Is due on receipt legally enforceable?

The terms you and the client agreed decide when payment is due. If you agreed nothing, the default rules apply: in the EU and the UK, a business payment becomes late 30 days after the customer receives the invoice or the goods or services, if later. So put the terms in your quote or contract before the work starts, not only on the invoice.

Can I charge interest on a late invoice?

In the EU and the UK, yes, for payments between businesses, even if your contract says nothing about it. The EU minimum is the ECB reference rate plus 8 percentage points, 10.40% for July to December 2026 in euro countries. In the UK it is 8% over the Bank of England base rate, 11.75% for 2026. In the US there is no federal rule for payments between private businesses, so a late fee or interest has to be agreed in your contract, within your state's limits and any state payment law that covers the work.

What is the €40 late payment fee?

Under Article 6 of the EU Late Payment Directive, a business that pays late owes the creditor at least a fixed €40 as compensation for recovery costs, on top of interest and without a reminder. Reasonable recovery costs above that, such as a lawyer or collection agency, can be claimed too. The UK has a similar fixed sum of £40, £70 or £100 depending on the size of the debt.

Is 2/10 net 30 a good deal for my customer?

It is a generous one. Skipping a 2% discount to pay 20 days later costs the customer 37.24% a year as a simple rate. Compare that with what their credit line or savings rate is. For you as the seller, the same number is what the faster payment costs you, so offer it only when getting paid sooner is worth that much.

Sources

Written by Tobias Kurth, designer. Updated October 20, 2026.