Invoice payment terms: net 30, legal limits and what to write

The common payment terms, decoded

These are business conventions, not legal definitions, so spell out what you mean on the invoice.

Because each client's accounts team may read "Net 30 EOM" differently, the safest line on an invoice is the date itself. Nobody has to count, and nobody can argue.

Is 2/10 net 30 worth offering?

An early-payment discount speeds up cash, but it's expensive. The client who skips a 2% discount keeps 98% of the money for 20 extra days. Annualised, that's 2 ÷ 98 × 365 ÷ 20 = 37.2% a year.

Worked example: on a $5,000 invoice, 2/10 net 30 means the client pays $4,900 by day 10 or $5,000 by day 30. You give up $100 to be paid 20 days sooner. That can make sense if a late payment would force you onto an overdraft or credit card at a high rate. It rarely makes sense as a default. A deposit on acceptance (see our guide to the deposit invoice) often protects cash flow at no cost.

UK: what the law allows

The Late Payment of Commercial Debts (Interest) Act 1998 applies between businesses:

• No agreed date? Payment is late 30 days after the customer receives the invoice, or receives the goods or services if that's later.
• Agreed date: GOV.UK says it "must usually be within 30 days for public authorities or 60 days for business transactions". Longer than 60 days between businesses is possible only if it's fair to both.
• When payment is late, you can claim statutory interest at 8% plus the Bank of England base rate (unless your contract sets a different rate), plus a fixed sum per invoice for recovery costs: £40 for debts up to £999.99, £70 from £1,000 to £9,999.99 and £100 for £10,000 or more.

If the reference base rate is 3.75% (Bank Rate was held at 3.75% on 17 September 2026), statutory interest is 11.75% a year. On a £2,400 invoice paid 20 days late: £2,400 × 11.75% × 20 ÷ 365 = £15.45, plus £70 compensation. On a late invoice of this size, the fixed sum is worth more than the interest.

Public sector. Under section 68 of the Procurement Act 2023, in force since 24 February 2025, public contracts carry an implied term that the authority pays a valid, undisputed invoice within 30 days of receiving it.

Consumers. The 1998 Act doesn't apply to sales to individuals. You set the due date in your terms, and you can only charge late fees or interest if your contract said so.

What happens after the due date (reminder emails, letters before action, small claims) is covered in our guide to chasing an unpaid invoice.

US: contract first

There's no federal law setting payment terms or late interest for private business-to-business invoices. What applies:

• Your contract or accepted quote. If you want Net 15, a late fee or interest, agree it in writing before the work. State usury and consumer rules can cap what you charge.
• Federal government clients. The Prompt Payment Act requires agencies to pay proper invoices within 30 days (14 days for construction progress payments), or pay interest. The Prompt Payment interest rate for 1 July to 31 December 2026 is 4.75%.
• Freelancer laws in some states and cities. New York City and New York State, California and Illinois have freelance worker laws that require written contracts above set amounts and, where no date is agreed, payment within 30 days of completing the work. Details and thresholds are in our chasing guide.

What to write on the invoice

Put payment terms where the client's accounts team will see them: near the total. A template:

Invoice date: 25 September 2026
Payment terms: Net 30
Due date: 25 October 2026
Pay by: bank transfer to [account name, sort code / routing number, account number]
Please quote the invoice number as your payment reference.

Late payment (business clients, UK): we may claim statutory interest and
fixed-sum compensation under the Late Payment of Commercial Debts
(Interest) Act 1998.
Late payment (US): [late fee or interest rate, only if agreed in your contract].

Keep only the late-payment line that applies to you. For a consumer client, keep the due date and how to pay, and include a late fee only if your agreed terms include one.

Choosing your terms

The law sets ceilings, not defaults you have to offer. You can ask for payment on receipt, in 7 or 14 days, or a deposit on acceptance, as long as the client agrees before the work starts. Some starting points:

Our guide to writing a quote shows where payment terms go before the job starts.

Track due dates without a spreadsheet

In Binome360 you create an invoice by typing or speaking a sentence. Numbering is automatic, your business details and payment notes sit in the footer, and you share a link your client can open and download as a PDF. When the money arrives you mark it paid; once the due date passes, the invoice is flagged and a polite reminder message is drafted for you. Binome360 doesn't collect payments or connect to your bank. For a one-off, the free invoice generator needs no account.

Frequently asked questions

What does net 30 mean on an invoice?

The full amount is due within 30 days of the invoice date. Some clients count from the date they receive the invoice instead, which is why writing the actual due date on the invoice avoids arguments.

Is net 30 the law?

Not as such. In the UK, 30 days is the default when no date is agreed between businesses, and the usual limit for public authorities. In the US, 30 days is the federal standard for government payments and the default in some state freelancer laws, but private businesses can agree other terms.

Can I change payment terms on an existing client?

For future work, yes: tell the client in writing and update your quote or contract before the next job. You can't change the terms of an invoice already issued under agreed terms without the client's agreement.

What's the difference between net 30 and 30 days EOM?

Net 30 counts 30 days from the invoice date. "Net 30 EOM" usually counts 30 days from the end of the month the invoice is dated. For an invoice dated 25 September 2026, that's 25 October versus 30 October.

Should I charge late fees?

Only if they're agreed in advance. In the UK, statutory interest and fixed compensation are available between businesses even if your contract is silent. In the US, a late fee applies only if the client agreed to it, within any state limits.

In short

Net 30 means 30 days from the invoice date; EOM terms count from the end of the month; early-payment discounts are expensive. In the UK, business terms usually stop at 60 days and public bodies at 30; in the US, your contract decides, except for government work and some freelance laws. First step: put a real due date, payment details and your late-payment line on your invoice template today.

Sources

• GOV.UK, "Late commercial payments: charging interest and debt recovery" (30-day default, 60-day and 30-day limits, statutory interest, fixed sums £40/£70/£100): gov.uk/late-commercial-payments-interest-debt-recovery.
• Late Payment of Commercial Debts (Interest) Act 1998: legislation.gov.uk/ukpga/1998/20.
• Bank of England, "Bank Rate" (3.75%, held on 17 September 2026): bankofengland.co.uk.
• Procurement Act 2023, section 68 (implied 30-day payment term in public contracts): legislation.gov.uk/ukpga/2023/54/section/68.
• Bureau of the Fiscal Service, "Prompt Payment" (30-day rule, interest rate for July to December 2026): fiscal.treasury.gov/prompt-payment.
• 5 CFR Part 1315, Prompt Payment: ecfr.gov.

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