TLDR (Summary)
Payment terms define when and how freelancers get paid, and the wrong terms can add weeks to every payment cycle. Net 30 is the most common B2B term, but Net 15 is increasingly preferred by freelancers because it cuts wait times in half without creating friction with clients. Invoices with explicit due dates cut late payments by 42%, compared to invoices that leave payment timing open-ended.
What follows: a breakdown of every payment term type, which terms fit different project structures, how 2/10 Net 30 discounts work, what late fee percentages are legally safe, a reminder sequence backed by data, and contract clauses that protect freelance cash flow before work begins.
Payment term types for freelancers
Payment terms are the rules printed on an invoice that tell the client exactly when payment is due and what happens if it arrives late. Each term type serves a different relationship, project size, and cash flow need. Choosing the wrong one doesn't just delay payment, it sets the wrong expectation for the entire client relationship.
Due on Receipt
Payment is expected immediately when the invoice arrives. Due on Receipt works for small, one-off projects under $500 where the deliverable is already in the client's hands. The downside: corporate clients with accounts payable departments can't process payments the same day, so Due on Receipt often gets treated as "whenever we get to it" in larger organizations.
Net 7
Payment due within 7 calendar days of the invoice date. Net 7 is ideal for retainer clients with established payment processes. Monthly retainers billed on the first with Net 7 terms mean payment arrives by the 8th, keeping cash flow predictable. Most retainer clients accept Net 7 without pushback because the recurring nature of the relationship removes the urgency friction.
Net 15
Payment due within 15 calendar days. increasingly the standard because it gives clients enough time to process payment without stretching the freelancer's cash flow. According to Bonsai, 29% of freelance invoices are paid at least one day late, so the shorter window means even late payments arrive sooner than they would under Net 30.
Net 30
Payment due within 30 calendar days. Net 30 remains the most common B2B payment term globally, but for freelancers, it creates a 30+ day gap between completing work and receiving payment. Factor in North American suppliers waiting 43 days on average, and Net 30 often means waiting 40-50 days in practice. Enterprise clients may require Net 30 as a condition of engagement, but freelancers should negotiate Net 15 whenever the relationship allows.
Net 60 and Net 90
Extended terms used by large corporations and government agencies. Net 60 and Net 90 terms create severe cash flow gaps for freelancers. A $10,000 project completed in January under Net 90 terms won't pay out until April at the earliest. Freelancers who accept these terms should factor the delay into their pricing, adding 10-15% to cover the cost of waiting.
Milestone-based billing
Payment tied to specific project phases rather than calendar dates. A $15,000 website build might split into three milestones: 33% at wireframe approval, 33% at design approval, and 34% at launch. Milestone billing keeps cash flowing throughout the project instead of concentrating all revenue at the end, and it limits exposure if a client disappears mid-project.
Deposit + balance
A percentage paid before work begins, with the remainder due on completion or at milestones. A 25-50% deposit confirms client commitment and covers the freelancer's initial time investment. For new clients with no payment history, 50% upfront is standard. For established clients, 25% is sufficient.
The term type matters less than whether it appears on the invoice at all. Invoices with explicit due dates get paid 42% more often on time than invoices that leave payment timing open-ended.
Choosing payment terms by project type
The right payment term depends on three factors: project length, client type, and how much financial exposure the freelancer can absorb. A one-off logo design and a six-month retainer need fundamentally different billing structures, and applying the same terms to both creates problems on at least one side.
One-off projects under $2,000
Due on Receipt or Net 7 with a 50% deposit. Short projects carry the highest non-payment risk because there's no ongoing relationship motivating the client to pay promptly. The deposit covers the freelancer's time if payment stalls, and the short Net window keeps the total wait time under two weeks. Pairing these terms with a one-click payment link in the invoice removes the "I'll pay when I get to my desk" excuse.
Mid-range projects ($2,000-$10,000)
Net 15 with 25-50% deposit and milestone billing. A $6,000 branding project might split into three milestones: $2,000 at concept approval, $2,000 at final design, and $2,000 at asset handoff. Each milestone gets its own invoice with Net 15 terms. The freelancer never carries more than one phase of unpaid work at a time, and the client pays for progress rather than a single large sum at the end.
Large projects over $10,000
Net 15 with 25% deposit, monthly milestones, and a kill fee clause. A $30,000 website development project spanning three months should bill monthly at minimum. The deposit ($7,500) covers the first phase, monthly invoices bill for completed work, and the kill fee (typically 25% of remaining value) protects against cancellation. For projects this size, the contract should specify exactly which deliverables trigger each payment and what happens if scope changes mid-project.
Monthly retainers
Net 7 with automatic recurring invoicing on a fixed date. Retainers are the most predictable billing structure because the amount and timing repeat each cycle. Setting up recurring invoices that send automatically on the 1st of each month with Net 7 terms means payment arrives by the 8th, every month, without manual effort. Invoicing tools that support recurring billing handle the sending and reminders automatically.
Enterprise and corporate clients
Net 30 (negotiated down from Net 60 when possible) with milestone billing. Corporate accounts payable departments operate on fixed cycles, and pushing for Net 15 against a procurement process that runs bi-weekly may not be realistic. The workaround: milestone billing with Net 30 terms, so invoices enter the payment cycle more frequently even if each one takes 30 days to clear. Price the engagement 10-15% higher to offset the longer cash flow gap.
Matching terms to project type isn't about preference, it's about controlling financial exposure. The goal is to keep the maximum unpaid balance as low as possible at every stage of the engagement.
Early payment discounts for freelance invoices
An early payment discount gives clients a percentage off the invoice total for paying before the due date, and the math favors both sides.
The most common structure is 2/10 Net 30: a 2% discount if the client pays within 10 days, with the full amount due in 30 days. On a $5,000 invoice, the client saves $100 by paying 20 days early. The $100 discount might seem like a loss, but annualized, it equals a 36.7% return for the client, making early payment one of the highest-return uses of their cash. For the freelancer, the 2% cost buys 20 fewer days of waiting.
When early payment discounts make sense
The discount works best with clients who have the cash to pay early but default to Net 30 because there's no incentive to move faster. Agency clients, established small businesses, and clients who've mentioned wanting to "reduce the time spent on accounts payable" are good candidates. The discount gives their finance team a concrete reason to prioritize the payment.
When to skip the discount
Discounts don't make sense for invoices under $1,000, where the 2% savings ($20 or less) isn't enough to change behavior. They also don't work with enterprise clients whose accounts payable cycles are fixed regardless of discounts, because the payment processor can't override the schedule even if the approver wants to pay early.
Other discount structures
1/10 Net 30 offers a 1% discount for payment within 10 days, halving the freelancer's cost while still providing an incentive. 2/10 Net 15 tightens both the discount window and the standard due date, working well for clients who already pay within 15-20 days and just need a nudge to pay within 10. Some freelancers offer a flat 5% discount for full project payment upfront, which eliminates all billing administration and guarantees revenue before work begins.
Early payment discounts reframe the payment conversation: instead of asking clients to pay faster, the freelancer is offering a financial incentive that translates to a 36.7% annualized return. Most clients take that deal when it's presented clearly on the invoice.
Late fee structures that protect freelancers
Late fees deter late payments first and recover lost time second, but the fee must be enforceable and stated before the due date.
The standard late fee range for freelance invoices is 1-1.5% per month on the unpaid balance, which translates to 12-18% annually. A $5,000 invoice with a 1.5% monthly late fee accrues $75 per month in additional charges. The amount isn't significant enough to create adversarial tension, but it's enough to make a client's accounts payable department prioritize the payment.
Percentage-based vs. flat fees
Percentage-based fees (1-1.5% per month) scale with invoice size, so the deterrent effect stays proportional. A $500 invoice accrues $7.50/month while a $10,000 invoice accrues $150/month. Flat fees ($25 or $50 per late invoice) work for standardized billing amounts but create problems at the extremes: $25 on a $200 invoice feels punitive (12.5% penalty), while $25 on a $15,000 invoice is meaningless (0.17%).
Legal considerations
Late fee enforceability depends on disclosure and reasonableness. The fee must be stated in the contract and printed on the invoice before the due date. Surprising a client with a previously undisclosed fee isn't enforceable in most jurisdictions. According to Nolo's legal guidance, charging 10% per year or less is unlikely to violate any state usury statute. At 1.5% per month (18% annually), the fee sits in a gray area in some states but is standard in commercial transactions. Freelancers billing under contracts with mutual agreement to the fee terms are on solid legal ground in most US jurisdictions.
Contract language that holds up
Vague clauses like "late fees may apply" carry no weight. The clause needs specifics: "A late fee of 1.5% per month (18% per annum) applies to all balances unpaid after the stated due date. Late fees begin accruing on the first day past the due date and compound monthly." The same language should appear on every invoice, not just in the contract. Including it on the invoice serves as a reminder and establishes that the client saw the terms before the due date passed.
Enforcing vs. waiving
Some freelancers waive the late fee on a first offense as a relationship gesture, then enforce on the second late payment. The approach builds goodwill while establishing that the fee is real. The waiver should be explicit: "Waiving the $75 late fee this time, but the clause applies to future invoices." This prevents the client from assuming the fee is decorative. For repeat late payers, the fee should be applied automatically and included in the follow-up reminder email with the updated balance.
The late fee that works best is the one the client never has to pay. A clearly stated 1.5% monthly fee on every invoice motivates on-time payment. When enforcement is needed, the specificity of the clause makes collection straightforward.
The payment reminder sequence for freelancers
A structured reminder sequence resolves more late invoices than any single follow-up email, and the timing of each message matters as much as the tone. According to Smart SMS Solutions, 65-70% of late payments resolve at the first reminder. The remaining 30-35% need escalation, but even those rarely require legal action when the sequence is consistent.
5 days before due date: the pre-reminder
A short, friendly note: "Quick heads up that Invoice #1047 for $4,200 is due on March 15th. Payment link is below if you'd like to get it handled early." The pre-reminder catches invoices that slipped through the cracks before they become overdue. Tone: casual, helpful, no urgency.
Due date: the confirmation
"Invoice #1047 for $4,200 is due today. Here's the payment link for your convenience." No additional commentary needed. The message is a timestamp that establishes awareness on the client's side.
3 days past due: the first follow-up
"Following up on Invoice #1047 for $4,200, which was due on March 15th. If payment has already been sent, please disregard this message. If not, the payment link is below." This is where 65-70% of late payments resolve. The client's usual response: they forgot, the email got buried, or they thought they'd already paid. The follow-up solves all three.
7 days past due: the reminder with teeth
"Invoice #1047 for $4,200 is now 7 days past due. Per the terms in our agreement, a late fee of 1.5% per month applies to overdue balances. The current balance including the accrued fee is $4,263. Payment link below." The tone shifts from helpful to factual. Mentioning the late fee clause and the updated balance shows the freelancer is tracking the situation. The late fee calculator generates the exact accrued amount for inclusion in the email.
14 days past due: the work pause
"Invoice #1047 for $4,200 is 14 days past due. Per our agreement, all current and upcoming work is paused until the unpaid balance of $4,326 (including accrued late fees) is resolved. I'm happy to resume immediately once payment is received." Pausing work at 14 days is the most effective escalation tool a freelancer has. Clients who ignored three emails respond when deliverables stop arriving. The pause message also creates a paper trail that protects the freelancer if the dispute escalates.
30+ days past due: formal notice
At 30 days, the message becomes a formal demand letter referencing the contract, the original invoice, all previous communications, and the total balance including fees. Most freelancers never reach this stage. For the ones who do, laws like New York's Freelance Isn't Free Act provide legal recourse: written contracts are required for engagements over $800, and clients who violate payment terms face double damages.
The sequence works because each step raises the stakes slightly. Most clients pay at the first reminder. The few who don't respond to the work pause. Legal escalation is the last resort, and the paper trail from the sequence makes it straightforward if needed.
Contract clauses that protect freelance cash flow
Payment terms printed on an invoice only work when they're backed by a signed contract that specifies exactly what happens when those terms are violated. According to BrainLeaf's analysis, freelancers with detailed contracts earn roughly 28% more than those without, largely because enforceable terms reduce late payments, scope changes, and non-payment.
Payment schedule clause
"Client agrees to pay [amount] according to the following schedule: [deposit amount] due before work begins, [milestone amounts] due upon approval of each deliverable listed in the Scope section, and [final amount] due within [Net 15/Net 30] days of final deliverable acceptance." The payment schedule should mirror the invoices exactly. If the contract says Net 15 and the invoice says Net 30, the discrepancy creates ambiguity a client can use to delay payment.
Late fee clause
"A late fee of 1.5% per month (18% per annum) applies to all balances unpaid after the stated due date. Fees begin accruing on the first calendar day after the due date and compound monthly. Client acknowledges and agrees to these terms by signing this agreement." The "acknowledges and agrees" language is important because it prevents the client from claiming they didn't know about the fee. The late fee clause should appear in the contract and be summarized on every invoice.
Work stoppage clause
"Freelancer reserves the right to pause all work on current and future deliverables if any invoice remains unpaid 14 calendar days past the due date. Work resumes within [2 business days] of full payment, including any accrued late fees. Project timelines extend by the duration of the payment delay at no additional cost to the Client." The timeline extension detail matters: without it, a client who delays payment for two weeks could then claim the freelancer missed the original deadline.
Kill fee clause
"If Client terminates this agreement after work has begun, a kill fee of 25% of the remaining unpaid project value is due within 14 calendar days of termination. All work completed through the termination date remains the property of the Freelancer until all unpaid invoices and the kill fee are paid in full." Kill fees protect against clients who cancel mid-project after weeks of work have been invested. The 25% figure compensates for lost opportunity cost and time spent ramping up on the project.
Ownership transfer clause
"All intellectual property, source files, and deliverables remain the property of the Freelancer until final payment, including any unpaid invoices and fees, is received in full. Upon receipt of final payment, ownership transfers to the Client as specified in the Scope section." Tying ownership to payment is the strongest protection a freelancer has. A client who hasn't paid in full doesn't own the work, which means they can't use, publish, or distribute the deliverables legally. The contracts guide covers additional clause types and template language.
Scope change and additional billing clause
"Any work requested beyond the Scope section requires a written change order signed by both parties. Change orders include a revised timeline, additional fees, and updated payment terms. Work on change orders does not begin until the change order is signed and any required deposit is received." Scope changes without written authorization lead to disputes about what was agreed and what was additional. The written change order creates a paper trail that ties extra work to extra payment.
A contract without payment clauses is a project description with a signature line. The clauses above turn a contract into a cash flow protection tool that keeps payments predictable and gives the freelancer clear steps to follow when they're not. Plutio's contract builder includes these clauses as starting templates.
