Payment terms: meaning, types, examples and a list of invoice payment terms
Payment terms are the conditions a seller sets for when and how a customer must pay — for example "Due on receipt", "Net 30" or "50% upfront, balance on delivery". They are agreed before the sale, printed on the quote and the invoice, and they decide the due date that every reminder, late fee and statement is based on. Below: a list of common payment terms with their meaning and an example due date, how to word them on an invoice, how to choose terms that protect your cash, a short payment terms policy you can copy, and how to keep track of what each customer owes and when — including in Account Ledger by Ofisx.
Short answer
- Payment terms meaning: the agreed conditions for paying an invoice — when payment is due, any deposit, discount for early payment and penalty for late payment.
- Most common in the US: Due on receipt, Net 15, Net 30, Net 60 and 2/10 Net 30.
- Example: an invoice dated Nov 2, 2026 with terms "Net 30" is due Dec 2, 2026; with "Due on receipt" it is due Nov 2, 2026.
- Where to write them: on the quote or contract, on the customer's account set-up, and on every invoice together with the actual due date.
- Safest for a small business: deposits or Due on receipt for new customers; Net 15 or Net 30 only for customers with a good payment history.
List of payment terms and what they mean
The table uses an invoice dated November 2, 2026 for every example due date.
| Term | Meaning | Example due date | Typical use |
|---|---|---|---|
| PIA (Payment in advance) | Full payment before work starts or goods ship | Before delivery | New customers, custom orders |
| CWO (Cash with order) | Payment sent together with the order | With the order | Online and catalogue orders |
| CIA (Cash in advance) | Same idea as PIA — paid before shipping | Before delivery | Export, high-risk accounts |
| COD (Cash on delivery) | Paid when the goods are delivered | On delivery day | Deliveries to small shops, first orders |
| Due on receipt / Due upon receipt | Pay as soon as the invoice arrives; in practice within a few days | Nov 2, 2026 | Services, one-off jobs, consumers |
| Net 7 / Net 10 / Net 15 | Full amount due 7, 10 or 15 days after the invoice date | Nov 9 / Nov 12 / Nov 17, 2026 | Freelancers, frequent small orders |
| Net 30 | Full amount due 30 days after the invoice date | Dec 2, 2026 | The default business-to-business term in the US |
| Net 45 / Net 60 / Net 90 | Due 45, 60 or 90 days after the invoice date | Dec 17, 2026 / Jan 1, 2027 / Jan 31, 2027 | Large buyers, retailers, government |
| EOM (End of month) | Due at the end of the invoice month | Nov 30, 2026 | Monthly-billed accounts |
| Net 30 EOM | Due 30 days after the end of the invoice month | Dec 30, 2026 | Wholesale, monthly statements |
| 15 MFI / 21 MFI | Due on the 15th (or 21st) of the month following the invoice | Dec 15, 2026 / Dec 21, 2026 | Trade accounts settled once a month |
| 2/10 Net 30 | 2% discount if paid within 10 days, otherwise full amount in 30 days | Nov 12 (with discount) or Dec 2, 2026 | Suppliers that want faster cash |
| 50% upfront, balance on completion | Deposit before work, remainder when the job is done | Deposit now; rest on completion | Projects, contractors, events |
| Stage payments / Milestone payments | Fixed amounts at agreed stages of a project | Per milestone | Construction, software, design |
| Contra | The amount is offset against what you owe the customer | On settlement | Businesses that buy from each other |
Due dates are counted in calendar days from the invoice date unless the contract says otherwise (some say "from receipt of goods" or "business days"). For the Net 30 calculation step by step, including EOM variations, see Net 30 payment terms. For the real cost of an early-payment discount (2/10 Net 30 ≈ 37% a year), see trade credit.
Payment terms examples: how to word them on an invoice
Good wording is short, names the date, and says what happens if the date is missed. Examples you can adapt:
- Due on receipt: "Payment due on receipt. Please pay by November 2, 2026."
- Net 30: "Terms: Net 30. Amount due $1,850.00 by December 2, 2026."
- Early-payment discount: "Terms: 2/10 Net 30. Pay $1,813.00 by November 12, 2026, or $1,850.00 by December 2, 2026."
- Deposit: "50% deposit ($1,200.00) due on signing; balance of $1,200.00 due on completion."
- Late payment: "Invoices unpaid after the due date may be charged a late fee as agreed in our terms of sale." (State the rate only if it was agreed in writing and is allowed where you operate.)
- How to pay: "Pay by bank transfer to … or by check payable to … Please quote invoice number INV-1042."
Always print the actual due date, not only the abbreviation. "Net 30" is read differently by different customers; "due December 2, 2026" is not.
How to choose payment terms for your business
| Situation | Suggested terms | Why |
|---|---|---|
| First order from a new customer | PIA, COD or Due on receipt | No history yet; limit your risk |
| Regular customer, pays on time | Net 15 or Net 30 | Earns loyalty; still a short cash gap |
| Large project or custom work | Deposit + stage payments | You are not financing materials and labor alone |
| Many small deliveries to the same shop | Monthly statement, Net 30 EOM or 15 MFI | One payment a month instead of chasing every delivery |
| You need cash faster | Shorter terms, or 1/10 Net 30 for selected customers | A discount is expensive — offer it only where it really speeds payment |
| Customer is regularly late | Back to COD or Due on receipt | Terms are a privilege tied to payment history |
A simple rule: don't give customers longer terms than your own suppliers give you, unless you have the cash to cover the gap. If you pay your suppliers on Net 15 and give customers Net 45, you finance 30 days of every sale. See accounts payable tracking for the other side.
A one-page payment terms policy you can copy
- Standard terms: Net 30 from the invoice date for approved business accounts; Due on receipt for everyone else.
- New accounts: first order paid in advance or on delivery; Net 30 after three on-time orders.
- Projects over $2,000: 50% deposit before work starts, balance on completion.
- Statements: sent on the first business day of each month to every customer with an open balance.
- Reminders: a friendly reminder 3 days before the due date, a second one 7 days after it, then a call.
- Hold rule: no new orders on account when any invoice is more than 15 days past due.
- Disputes: report within 7 days of receiving the invoice; the undisputed part stays due on the original date.
Share the policy with the customer when you open the account and keep it on the quote. For reminder wording see payment reminder templates; for the monthly statement see the statement of account template.
Example: tracking due dates under different payment terms
A small supplier's customer list on December 3, 2026 — each customer on different terms:
| Customer | Terms | Invoice | Due date | Balance | Status |
|---|---|---|---|---|---|
| Harbor Café | Net 30 | Nov 2, 2026 — $620.00 | Dec 2, 2026 | $620.00 | 1 day late — send reminder |
| Mason Roofing | Net 30 EOM | Nov 10, 2026 — $2,400.00 | Dec 30, 2026 | $2,400.00 | Not yet due |
| Pine Street Deli | 15 MFI | Nov 6 + Nov 20, 2026 — $1,150.00 | Dec 15, 2026 | $1,150.00 | Not yet due |
| Lakeview Events | 50% upfront | Nov 25, 2026 — $2,400.00 | Deposit paid; rest on Dec 12, 2026 | $1,200.00 | Due on completion |
Whatever the terms, the question you need answered every week is the same: who owes how much, and what is due or overdue? That is a client ledger with due dates — see also how to track accounts receivable.
Ways to track payment terms and due dates compared
| Option | Best for | Payment terms | Due dates and reminders | Platforms | US App Store ratings (Oct 21, 2026) |
|---|---|---|---|---|---|
| Account Ledger by Ofisx | Small businesses that sell on credit and want each customer's balance on the phone | You set the due date on each sale on account | Alerts for upcoming and overdue amounts; WhatsApp balance reminder sent by you | iPhone (US App Store); Android on Google Play in Turkey only | New in the US store — no ratings yet |
| Intuit QuickBooks | Businesses that invoice every sale in QuickBooks | Payment terms on customers and invoices | Due dates from terms; email reminders | iPhone, Android, web | 273,010 ratings, 4.7 |
| Zoho Books | Small businesses invoicing in Zoho | Payment terms on customers and invoices | Reminders; customer statements | iPhone, Android, web | 5,264 ratings, 4.8 |
| Wave | Very small businesses that invoice in Wave | Due date on each invoice | Overdue reminders | iPhone, Android, web | 6,665 ratings, 4.4 |
| Spreadsheet | A handful of customers | A terms column you type | Due date formula (e.g. =A2+30, =EOMONTH(A2,0)+30) and a filter | Any | — |
The options in detail
Account Ledger by Ofisx
Account Ledger keeps a ledger for each customer and supplier — sales and purchases on credit with a due date, payments, partial payments and returns — and shows each running balance. Due-date alerts flag what is coming due or overdue; from the customer's card you can send the balance by WhatsApp or share the ledger as a PDF statement.
It does not issue invoices or store named payment-term presets such as "Net 30 EOM" — you enter the due date the terms produce. It does not calculate early-payment discounts or late fees.
Intuit QuickBooks
QuickBooks sets payment terms on customers and invoices and tracks receivables inside full accounting.
Zoho Books
Zoho Books supports payment terms, reminders and customer statements in full accounting.
Wave
Wave combines invoicing and bookkeeping for very small businesses.
Spreadsheet
A sheet with invoice date, terms, due date, amount and paid columns works for a few customers; it gets fragile with partial payments and several people editing.
How to set payment terms that get you paid
- Agree terms before the sale — On the quote or account application — not for the first time on the invoice.
- Print the real due date — "Net 30 — due December 2, 2026" removes every argument about counting days.
- Match terms to risk — Advance or on-delivery payment for new customers, credit terms only after a payment history.
- Keep terms shorter than your cash gap — Compare what you give customers with what your suppliers give you.
- Remind before, not only after — A note a few days before the due date gets many invoices paid on time.
- Review balances weekly — Per customer, with due dates — and move late payers to stricter terms.
Limits — what Account Ledger does not do
- Account Ledger does not issue invoices, store payment-term presets or calculate discounts and late fees; you enter the due date on each sale on account.
- It does not send automatic email reminder sequences or take card payments; you send the WhatsApp reminder from the customer's card.
- In the US the app is on the App Store for iPhone; the Android version is on Google Play in Turkey only for now.
- It is a paid subscription after the free trial; the App Store shows current plans and prices.
Frequently asked questions
What are payment terms?
Payment terms are the conditions a seller sets for paying an invoice: when payment is due, whether a deposit is required, whether there is a discount for paying early and what happens if payment is late. Examples are Due on receipt, Net 30 and 50% upfront.
What are the most common payment terms?
In US business-to-business sales the most common are Due on receipt, Net 15, Net 30, Net 60, EOM and 2/10 Net 30. Cash on delivery and payment in advance are common for new customers and first orders.
What does Due on receipt mean?
The invoice is payable as soon as the customer receives it. In practice customers pay within a few days, so it helps to add a specific date, e.g. "please pay by November 2, 2026".
What does EOM mean in payment terms?
EOM means end of month. "EOM" alone means due at the end of the invoice month; "Net 30 EOM" means due 30 days after the end of the invoice month — an invoice dated Nov 10, 2026 would be due Dec 30, 2026.
What does 15 MFI mean?
MFI means month following invoice. "15 MFI" means the invoice is due on the 15th of the month after the invoice date — any November 2026 invoice is due December 15, 2026.
What payment terms should a small business use?
Use payment in advance, cash on delivery or Due on receipt for new customers and one-off jobs, deposits plus stage payments for projects, and Net 15 or Net 30 only for regular customers who pay on time. Avoid giving customers longer terms than your own suppliers give you.
How do I write payment terms on an invoice?
State the term and the actual due date, the amount due, how to pay and the invoice number to quote — for example "Terms: Net 30. Amount due $1,850.00 by December 2, 2026. Pay by bank transfer, reference INV-1042."
How do I keep track of due dates under different payment terms?
Record each sale on account with its due date against the customer and check balances weekly. Accounting apps such as QuickBooks, Zoho Books and Wave calculate due dates from terms on invoices issued in them; Account Ledger by Ofisx keeps a running-balance ledger per customer with due-date alerts on iPhone, with a free trial and then a subscription.