Example
Net 15 for a first job, net 30 once the client has a payment history with you.
Also called credit terms, trade credit, or payment terms in conversation.
What it means in practice
Offering net terms means lending the client the money for that period. It is normal for commercial work and it has a cost, which is why longer terms should come with a higher price or a deposit.
For new clients and small jobs, due on receipt or net 7 is reasonable. Save net 30 and beyond for clients who have paid on time before.
Where it shows up on the paperwork
Net terms are the shape; the specific term, such as net 15 or net 30, is what prints. Both belong on the quote before they appear on an invoice.
What goes wrong
- Offering the same terms to every client regardless of history or size.
- Extending terms to win work without pricing the wait.
- Agreeing to a large client's 60 day terms by silence, because their portal offered no other option.
Common questions
What is the difference between net terms and net 30?
Net terms is the category: any arrangement giving the client a set number of days. Net 30 is one of them. Net 7, net 15 and net 60 are the others you will meet most.
Should I offer net terms to a new client?
Usually not on the first job. Due on receipt or net 7 with a deposit is reasonable until the client has a payment history with you. Longer terms are credit, and credit is earned.
Do longer terms cost me money?
Yes, in two ways: you finance the work for longer, and the risk of not being paid rises with time. If a client wants 60 days, that belongs in the price.