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Who doesn’t love that feeling of sending out a delicious invoice for work well done? Those dollar signs are your best friends! Is there something on that invoice that’s doing you more harm than good? If you're using net 30 payment terms, there might be.

Most freelancers create their first contracts and invoices without much idea of what they’re doing (myself included). As a result, many choose net 30 payment terms because they know net 30 is common in the business world so they shrug and say, “This’ll work” (again, guilty). Well, when you learn better, you do better, and this is where you learn why net 30 isn’t a freelancer’s friend.

What does Net 30 Payment Terms mean?

Giving your customers net 30 payment terms means the payment is due 30 calendar days after you send the invoice. Essentially, you are giving interest free credit to your clients for a month. These are generous payment terms, and may cause problems for small businesses and freelancers.

Why Freelancers Should Avoid Net 30 Agreements

Simply put, 30 days is a long time before the client needs to pay the invoice. It might work for more structured and established companies but that timeline presents several problems for freelancers.

Cash Flow Issues

Net 30 terms are common in B2B sales because traditional companies are structured to have reserves available. They typically operate on more fluid income or payment schedules after delivering their goods or services.

As a freelance business, though, you’re running a household. Freelancers have tighter schedules of bills to pay with fewer reserves. Even an early payment that arrives three weeks after you dedicate your valuable time to a project can be too late depending on your bills’ due dates.

Time for Problems to Arise

A lot can happen in the 30 days after the invoice date. Your client’s business can take a downturn so they can no longer pay what they owe you. The client could simply decide they no longer like the price they agreed to and choose to play hardball. Sure, you should win out in the end if there’s a signed contract, but no one wants the added headache regardless of how it ends up. Your customer could have cash flow problems of their own.

The shorter time span there is between making the agreement and requiring payment, the less can go wrong between that time. This includes the time between your invoice and the payment’s due date.

Long Delay for Repercussions

I like to expect the best from people, but we all know some clients enter agreements with no intention of paying. We all hope to spot red flags and weed out those scammers instead of working for them but it’s always a possibility.

If your contract has net 30 payment terms, you can’t even begin taking action to get the money until that month is over. That includes sending debts to collections and charging interest on overdue amounts. Sometimes you could sue them in small claims court before those 30 days but only if they’ve explicitly stated that they won’t pay you.

What Other Payment Terms Could You Use?

If you don't want to use net 30 payment terms, what are your options?

There are many different options, and they have advantages and disadvantages for business owners. Let's have a look at a few of them.

Payment is Due with the Invoice

You could choose to make your payment due when you send the invoice. If you are delivering something specific, then this is an easy option. Here are some examples:

  • You run a photography business. Instead of offering net 30 payment terms, send watermarked images and videos for approval. If the client approves, require full payment before sending the full resolution files. This is how shops and businesses operate. They get paid before you leave the store with the goods.
  • You are a web developer creating websites for customers. Instead of net 30 terms, build the website on a staging site and require invoice payment before transfer to the customer's web hosting. You can guarantee transfer within a specific number of days if the customer makes this request.

You do not have to feel stuck offering net 30 terms when you are delivering a specific piece of work.

Payment is Due Within a Number of Days After the Invoice Date

This is basically the same as net 30 terms, but with a smaller number of days. Ask for payment within 7 calendar days or within 10 days. You did quality work and you may expect the client to pay the bill promptly. Instead of net 30, offer net 7, net 10, or net 15 as a credit term.

As a small business, the shorter payment term will help your cash flow and means you are not offering generous credit terms to businesses larger than yours.

Offer a Discount for Early Payment

If you want to continue with net 30 terms, you can offer a discount when customers pay before the due date. This will help you get paid sooner and avoid late payments. Many clients, especially savvy small business owners, will save every penny they can, so your early payment discount means they pay the invoice as soon as they can.

Include Charges for Late Payment

Another option is to charge customers for late payments made after the credit terms have been abused. If the customer has 30 days to pay, and the invoice isn't paid within this time, then charge your customer a late fee. There may be laws governing how much your late fees can be, so it's wise to check your local rules.

You can combine all the above. Offer net 10 credit terms with an early payment discount and late charges that apply after the due date has passed. Of course, your customer might not like your credit terms and could go elsewhere. So it's better to find nicer ways of getting paid promptly.

Remember: Payment Terms are Variable

This is something few people talk about so it’s worth stating. You don’t have to give the same payment terms to every client.

We all have come clients who consistently pay right away and others we don’t trust so much. It’s well within your rights to offer net 14 or net 20 invoicing payment terms to trustworthy clients with shorter timeframes to the sketchier few. After all, payment terms essentially offer short term credit, so there’s no need to give that credit to someone who doesn’t pay on time.

Standing Up for Your Business

In all honesty, for many freelancers, the toughest part when they start out is learning how to advocate for themselves. It’s not an easy skill, even after years of solopreneurship. Many freelancers still struggle. It becomes easier with practice but remember this: you’d expect to be paid on time by an employer, so don’t accept any less from clients either. Choosing your payment terms well is an important part of protecting your budding business’s financial stability.

Whatever timeline you and your client agree on, Indy’s got you covered when it comes to getting paid. Not only does Indy utilize methods like PayPal, Zelle, and Stripe, but offers free Stripe and PayPal fee calculators that will show you the expected fee for an invoice and what you should charge to make sure you’re not paying for it. 


How Does Net 30 Terms Work?

Net 30 terms are a trade credit. This means your customer's bill is due in 30 days instead of immediately. Net 30 is a credit agreement, although usually without interest. The net 30 days means you get paid within 30 days of sending the invoice.

Why Do Companies Pay Net 30?

Net 30 has been a standard payment term for many years. 30 years ago, many payments were made by mail, so offering net 30 was a way for one business to offer its customers time to pay invoices without calculating interest or late fees. Now, businesses have many more options, but net 30 is still used because it is standard practice and also generous.

Does net 30 include weekends?

Using net 30 usually means weekends are included. When a payment is due in 30 days, the custom is simply to require payment on or before the same day next month. Trying to exclude weekends would simply complicate due dates. Of course, some businesses can choose to exclude weekends, but this will be clear on the invoice.

What is meant by the payment term 2/10 net 30?

This is an early payment discount of 2% if the invoice is paid in the next 10 days. Another example of this could be 3/15 net 60. This offers a 3% discount for payment within 15 days but also requires payment of the full amount within 60 days.

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