Invoice payment terms: what to write, with examples
Payment terms tell the customer when and how to pay. On a contractor invoice, write a real due date, even next to a term like "Net 15", list every way you take payment, and show any deposit and balance left. Add a late fee only if the customer agreed in writing beforehand; rules vary by state, so check yours.
This is general guidance, not legal advice. Rules on late fees and interest vary by state, so check yours.
What payment terms are, and where they go
Payment terms say when the money is due, how much is due at each point, and how the customer can pay. They belong in two places.
Put them on the estimate first
The customer agrees to the terms before the job starts, so the invoice holds no surprises. The free estimate template has a "Notes and terms" box for them.
On the invoice, next to the balance due
Repeat the same terms on the invoice, with the due date right by the balance. The free invoice template has a "Due" field, a "How to pay" box and Notes.
Payment terms and what they mean
| Term | What it means | Where to write it |
|---|---|---|
| Due on receipt | Pay when the invoice arrives. | In the invoice "Due" field (its placeholder already says "Due on receipt"), plus a date. |
| Due on completion | Pay when the job is finished. | On the estimate, so the customer agrees before work starts; on the invoice, add the date. |
| Net 15 / Net 30 | Pay within 15 or 30 days of the invoice date. | Always add the actual date; not every customer knows what "net" means. |
| Deposit plus balance on completion | Part up front, the rest when the job is done. | On the estimate; the invoice shows "Less deposit paid" and the balance due. |
| Stage payments | Payments tied to stages the customer can see finished. | See progress invoicing. |
Due on receipt vs net 30
Due on receipt asks for payment now; Net 30 gives the customer 30 days from the invoice date. Either way, write the date. Pick what fits the job and your cash flow, and agree it on the estimate first.
Payment terms you can copy
Example only: change the names, amounts, dates and terms to match your job. Rules on late fees and interest vary by state, so check yours.
| Term | Line to copy | Where it goes |
|---|---|---|
| Due on receipt | Payment due on receipt. Please pay by [date]. | Invoice "Due" field |
| Due on completion | Balance due when the job is finished. Please pay by [date]. | Estimate "Notes and terms"; invoice "Due" field |
| Net 15 | Terms: Net 15 (15 days from the invoice date). Please pay by [date]. | Invoice "Due" field or Notes |
| Net 30 | Terms: Net 30 (30 days from the invoice date). Please pay by [date]. | Invoice "Due" field or Notes |
| Deposit plus balance on completion | Example only: Job total $750.00. Deposit of $250.00 due at approval to order materials and hold your start date. Balance of $500.00 due on completion, by [date]. | Estimate "Notes and terms" (to bill the deposit, use the deposit invoice template) |
| Stage payment | Payment [2] of [3]: $[amount] due when [stage the customer can see] is complete. Please pay by [date]. | Estimate and each stage invoice (see progress invoicing) |
| How to pay | Ways to pay: [your payment link] · check payable to [your business name] · [any other way you accept]. | Invoice "How to pay" box |
| Late fee (placeholder only) | Late fee: [the fee you agreed with the customer and have confirmed your state allows] if the balance isn't paid by [date], as agreed on estimate #[number] approved [date]. | Estimate first; repeat on the invoice only if it was agreed. |
| Questions | Questions about this invoice? Call or text [your number]. | Invoice Notes |
Rules on late fees and interest vary by state, so check yours before you use this line.
Late fees and interest: check your state first
Agree it before the job, in writing
Put any late fee on the approved estimate. Never add it for the first time on the invoice.
What to check
Check whether a late fee or interest is allowed for your kind of work, how much, when it can start, and how it has to be written. Ask your state's consumer protection office or contractor licensing board, or a lawyer.
Card fees are a separate question
Thinking of adding a card fee? Check your state's surcharge rules and your card processor's terms first.
Make the terms easy to follow
- Use the same terms on the estimate and the invoice.
- Write the due date as a date, next to the balance due.
- List every way to pay.
- Send the invoice the day you finish; see how to write an invoice.
When the due date passes
Send one friendly reminder, then see how to follow up on an unpaid invoice. If you text it, send it one-to-one to the number the customer gave you for this job, keep it about this job, and stop if they ask. Texting rules vary; check what applies in your state. When they pay, send a receipt with the payment receipt template.
Frequently asked questions
What does net 30 mean on an invoice?
The customer has 30 days from the invoice date to pay; Net 15 means 15 days. Write the actual due date next to it, because not every customer knows the term.
Should I use due on receipt or net 30?
There's no single right choice. Due on receipt asks for payment now; Net 30 gives a month. Pick what fits the job and your cash flow, agree it on the estimate, and write a date on the invoice.
Can I charge a late fee on an invoice?
Rules vary by state, so check yours. Only charge one the customer agreed to in writing before the job, and never add it for the first time on the invoice. See late fees and interest.
What payment terms should a contractor use?
There are options, not one rule: due on receipt or on completion for short jobs, a deposit plus the balance on completion when you buy materials up front, and stage payments for longer jobs. Keep every payment due by the end of the job. Spreading payments past the finish can count as offering credit, which has its own rules. Some states limit deposits on home-improvement work, so check yours. See how to ask for a deposit and progress invoicing.
Put your terms on an invoice now
Start from the free invoice template, or pick one from the invoice templates by trade. Billing a deposit first? Use the deposit invoice template. For a longer job, see progress invoicing.
Doing this from your phone
Pencilslip is an estimates and invoices app for solo tradespeople. The free version works today in your phone's browser: estimates, invoices, job photos, your own payment link, and a PDF you can send. No account needed. Free: no cap on the number of estimates or invoices on this device. It saves only in this browser on this device, so download a backup from Settings now and then.
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