Payment terms are the line on your invoice that tells the client when and how to pay, for example "Net 30: payment due within 30 days of the invoice date". Clear terms, written the same way on your contract, quotation and every invoice, are the cheapest tool you have for getting paid on time. For exporters there is an extra reason to get them right: foreign invoices must be realised within 9 months from the invoice date, so loose terms can turn into a compliance problem.
Key takeaways
- State a due date or a number of days, and say what the days count from (usually the invoice date).
- Net 15, Net 30 and Net 45 are the most common; "Due on receipt" works for small jobs and new clients.
- Late fees and early-payment discounts only work if they were agreed in the contract first.
- Put the same terms on the quotation, contract and invoice. Inconsistency gives slow payers an excuse.
- For export invoices, keep payment terms well inside the 9-month realisation window.
The common terms, decoded
| Term | Meaning | Good for |
|---|---|---|
| Due on receipt | Pay as soon as the invoice arrives | Small jobs, new clients, one-off work |
| Net 7 / Net 15 | Pay within 7 or 15 days of the invoice date | Freelancers, small agencies, short projects |
| Net 30 | Pay within 30 days | Standard for many businesses and retainers |
| Net 45 / Net 60 | Pay within 45 or 60 days | Large corporate clients with fixed payment runs |
| 2/10 Net 30 | 2% discount if paid within 10 days; otherwise full amount in 30 | Encouraging early payment |
| EOM (end of month) | Due at the end of the month of the invoice | Clients with monthly payment cycles |
| Net 30 EOM | Due 30 days after the end of the invoice month | Large clients; check carefully, it is longer than it looks |
| 50% advance, 50% on delivery | Split between start and finish | Projects with real upfront cost |
| Milestone-based | Each stage invoiced and paid on completion | Long projects |
| CIA (cash in advance) | Full payment before work begins | New, high-risk or very small clients |
"Net 30 EOM" deserves a second look. An invoice dated 2 March becomes due 30 April, nearly two months later. Make sure you mean it before offering it.
Writing terms that cannot be misread
Vague terms like "payable soon" or "standard terms apply" invite delay. Better wording includes four elements: the period, the starting point, the method and the consequence.
Weak: "Payment terms: 30 days."
Strong: "Payment due within 30 days of the invoice date (by 14 December 2026) by bank transfer to the account below. Invoices unpaid after the due date attract interest at 1.5% per month, as agreed in clause 8 of our agreement dated 3 June 2026."
Printing the actual due date removes all doubt. Most good invoice tools calculate it for you; our GST invoice generator and export invoice generator both have a payment terms field.
Sample wording you can adapt
- Due on receipt: "Payment due on receipt of this invoice."
- Net 15: "Payment due within 15 days of the invoice date, i.e. by [date]."
- Early-payment discount: "A 2% discount applies if paid in full by [date, 10 days from invoice]; otherwise the full amount is due by [date, 30 days from invoice]."
- Milestones: "Milestone 2 of 4 (design sign-off). Payment due within 15 days of the invoice date."
- Advance: "Advance of 50% per clause 4 of the agreement. Work begins on receipt."
- Export client: "Payment due within 30 days of the invoice date in USD by SWIFT transfer to the account below. All bank charges outside India to be borne by the remitter."
The last line matters for exporters. Without it, intermediary bank charges often come out of your invoice, leaving a small shortfall to explain to your bank.
Late fees and discounts: only if agreed
Adding a late fee to an invoice the client never agreed to rarely works and can sour the relationship. Put interest or late-fee terms in the contract or a signed quotation first, then refer to them on the invoice. The same goes for early-payment discounts: offer them in the agreement, then remind the client on each invoice.
| Tool | Encourages | Works best when |
|---|---|---|
| Late-payment interest | Paying by the due date | It is in the signed contract and you actually enforce it |
| Fixed late fee | Paying by the due date | Small invoices where interest is trivial |
| Early-payment discount | Paying early | Your margins can absorb it and cash flow matters |
| Advance payment | Committing upfront | New clients, custom work, high material costs |
Whether you can legally charge a particular rate, and how it is treated for GST, are questions for your CA or lawyer. This is general information, not legal or tax advice.
A worked example: getting paid faster
Pebblestone Web Studio, a Jaipur agency, used to write "Payment: 30 days" on every invoice. Average collection was 52 days. It changed three things:
- Printed the exact due date on each invoice.
- Added "Net 15" for retainer clients who had already agreed to it in renewed contracts.
- Sent a polite reminder three days before each due date.
The next quarter, its retainer invoices of ₹1,20,000 a month were arriving within about 18 days. Nothing changed in the work; only the clarity of the ask.
Payment terms on export invoices
Foreign invoices carry a regulatory clock as well as a commercial one. Under the 2026 export regulations, the full value of a services export must be realised within 9 months from the invoice date, or 12 months if invoiced in Indian rupees. Your AD bank can extend that on a reasoned request, but it is better not to need one.
- Keep terms short enough that even a late payer lands well inside 9 months. Net 30 or Net 45 leaves plenty of room; Net 180 does not.
- Milestone invoices each start their own clock from their own date.
- Agree the currency in the terms and on the invoice so the payment arrives in the declared currency.
- Track ageing monthly. Our guide on protecting your 9-month window has a simple routine.
If you agree an early-payment discount with a foreign client and it confirms it will take it, the amount you expect to realise falls, which matters when you complete your monthly EDF. The EDF itself is a FEMA declaration and does not change GST or income tax.
Frequently asked questions
What does Net 30 mean on an invoice?
Net 30 means the full invoice amount is due within 30 days of the invoice date. To avoid confusion, print the actual due date on the invoice as well, for example "Net 30, due 14 December 2026".
What is the difference between Net 30 and Net 30 EOM?
Net 30 counts 30 days from the invoice date. Net 30 EOM counts 30 days from the end of the month in which the invoice is dated, so an invoice dated early in the month can take nearly two months to fall due.
Can I charge a late fee if it was not in the contract?
It is difficult to enforce a late fee the client never agreed to. Put late-payment terms in the contract or signed quotation first, then refer to them on each invoice. Take legal advice on what you can charge.
What payment terms should I use for foreign clients?
Short, clear terms such as Net 15 or Net 30, in an agreed currency, with a line that bank charges outside India are borne by the remitter. Keep terms well within the 9-month realisation period for services exports.
Should freelancers ask for advance payment?
For new clients, custom work or projects with upfront costs, a partial advance (often 30 to 50%) is common and reduces risk. State it in the quotation and contract, then invoice the advance separately.
Bottom line
Good payment terms are specific, agreed upfront and repeated on every document. Print the due date, put late-fee terms in the contract, and keep export terms well inside the realisation window. Add clear terms to your next invoice with the free GST invoice generator or export invoice generator.
This guide is general information for Indian businesses, not legal or tax advice. Rules and bank processes change — confirm specifics with your AD bank or chartered accountant.