How to Create Payment Terms That Get You Paid on Time
Changing from Net-30 to Net-15 was the simplest change I made that had the biggest impact on my cash flow. Average payment time dropped from 22 days to 14 days. Same clients, same invoices, shorter deadline = faster payments. People procrastinate until the deadline approaches.
Here are the payment terms I use in every contract.
My Standard Payment Terms
For project work:
- 50% deposit before work begins
- 50% due on delivery, Net-15
- Late fee: 1.5% per month on overdue balances
- Online payment accepted (credit card and ACH)
For retainer work:
- Monthly fee due by the 1st, payable in advance
- Late fee: 1.5% per month
- Services pause after 7 days overdue
For large projects ($10K+):
- 30% deposit before work begins
- 30% at midpoint milestone, Net-15
- 40% on delivery, Net-15
Why Net-15 Works Better Than Net-30
In my experience across 340+ invoices, Net-15 results in faster payments AND fewer overdue invoices:
| Term | Avg Payment Time | Overdue Rate |
|---|---|---|
| Net-30 (years 1-2) | 22 days | 15% |
| Net-15 (years 3-4) | 14 days | 4% |
The psychology is simple: shorter deadlines create urgency. When a client sees “due in 30 days,” it goes to the bottom of the pile. When they see “due in 15 days,” it moves up.
The Late Fee Clause
My contract states: “Invoices over 15 days past due are subject to a 1.5% monthly late fee.”
I’ve actually charged this fee exactly twice in 4 years. Both times, the client immediately paid the original amount and we waived the fee.
The fee isn’t really about collecting extra money. It’s a professional signal that your payment terms are real, not suggestions.
Enforcing Your Terms
Having terms and enforcing terms are different things. Here’s my enforcement approach:
Day 1 (invoice sent): Professional invoice with clear due date Day -3 (before due): Automatic reminder “Invoice due in 3 days” Day 0 (due date): Automatic reminder “Invoice due today” Day +3 (overdue): Automatic reminder “Invoice 3 days overdue” Day +7: Firmer automatic reminder mentioning late fee Day +14: Personal email or phone call Day +30: Pause work, formal notice
95% of invoices are paid by day 14. The system works because it’s consistent and escalating.
The Bottom Line
Set clear terms. Net-15 default. Deposits on all projects. Late fees in the contract. Automatic reminders. Personal follow-up when needed.
Your payment terms aren’t a formality — they’re a cash flow tool. The freelancers who get paid on time aren’t lucky. They have terms that create urgency and systems that enforce accountability.