Net 30 means the client has 30 days from the invoice date to pay. Net 60 gives them 60, net 45 gives them 45, net 15 gives them 15, and due on receipt means pay now. The number is how long you lend the client your money for free. Shorter suits you. Longer suits them. Most agencies should mix terms by billing type.
That's the comparison. The part that actually matters is what those extra days do to a small agency's bank balance... so there's a worked month further down.
What is the difference between net 30, net 45, net 60 and net 15?
Each "net" term is the number of days after the invoice date by which the client must pay in full. Net 15 is 15 days, net 30 is 30, net 45 is 45 and net 60 is 60. The only difference is how long the client holds your cash, interest-free, before you can use it.
Here's every pair people search for, side by side:
Terms | Client has | What it means for you |
|---|---|---|
Due on receipt | Pay when the invoice lands | Cash arrives as fast as the client's process allows. Best for retainers and small amounts. |
Net 15 | 15 days | Fair, short, and easy to defend. Good for hourly work you've already done. |
Net 30 | 30 days | The default. A month of your costs financed by the client. |
Net 45 | 45 days | Common with bigger clients. You carry six weeks of costs. |
Net 60 | 60 days | You are the client's bank for two months. Only worth it if the rate or the relationship justifies it. |
A few things to keep straight on the pairs:
- Net 30 vs net 60: the extra 30 days is a second month of payroll you fund yourself. For a small team that's usually the difference between comfortable and anxious.
- Net 30 vs net 45: 15 days sounds small. It's two extra weeks before you can cover the next payroll run, every cycle.
- Net 30 vs net 15: halving the wait. Clients rarely push back on net 15 when it's stated up front, especially for work already delivered.
- Net 30 vs due on receipt: "due on receipt" means no grace period. It works well when the invoice is expected, for example a retainer billed on the same date every month, and badly when the invoice is a surprise.
None of these is a law. They're conventions, and the one that applies is the one written on your invoice and in your agreement. I'm not a lawyer, and nothing here is legal advice.
Is net 30 from the invoice date or the due date?
Net 30 counts from the invoice date, unless your contract says otherwise. An invoice dated March 1 on net 30 is due March 31. It does not mean 30 days after the client approves it or after they receive it, unless you've agreed to that wording.
This is where small agencies get caught. The client's accounts team reads "net 30" from the day they received the invoice, or the day it was approved. You read it from the day you issued it. A week of lag disappears into that gap.
Two fixes that cost nothing:
- Print the actual due date on the invoice. "Due: March 31, 2027" can't be argued with the way "net 30" can.
- Send the invoice the day it's dated. If you date an invoice the 1st and send it on the 8th, you've already given away a week.
Is net 30 illegal?
No. Net 30 is an ordinary payment term that you and your client agree. It's not a legal requirement and it's not prohibited. Rules about late payment, interest and fees vary by state and by who the client is, so check yours if you plan to enforce them.
The more useful question is whether net 30 is good for you. Legal and sensible aren't the same thing. A term that's perfectly lawful can still be the reason you're short on payroll in week four.
I'll say this plainly: net 30 is the default because it's what clients' accounts teams are set up for, not because it's the best deal for the person doing the work. You can offer something shorter. Plenty of clients will say yes, and the ones who say no tell you something about how they pay.
A worked month: what the terms do to a 6-person agency
Take a 6-person agency. Monthly outgoings are $44,000: salaries, contractors, rent, software. They go out through the month. The agency bills four things in March:
- Retainer A, $12,000, billed on March 1
- Retainer B, $9,000, billed on March 1
- A milestone, $18,000, delivered and invoiced on March 12
- Hourly work for one client, $11,000, billed in two halves ($5,500 on March 15 and $5,500 on March 31)
That's $50,000 billed against $44,000 of cost. Profitable on paper. Now watch the bank balance, assuming every client pays exactly on the due date (the best case).
Everything on net 30:
Date | Cash in |
|---|---|
March 31 | $21,000 (both retainers) |
April 11 | $18,000 (milestone) |
April 14 | $5,500 (first hourly invoice) |
April 30 | $5,500 (second hourly invoice) |
By March 31 the agency has paid out roughly $44,000 and received $21,000. It's about $23,000 short, in a month where it billed $50,000. And that's assuming nobody is late.
Terms matched to the work:
- Retainers due on receipt, billed on the 1st: $21,000 in by about March 3
- Milestone due 7 days after delivery: $18,000 in on March 19
- Hourly on net 15: $5,500 in on March 30, the second half on April 15
By March 31: $21,000 + $18,000 + $5,500 = $44,500 in against $44,000 out. Same work, same clients, same invoices. The only change is the terms printed on each one.
That's the whole argument. The numbers are an illustration, not a benchmark, but the pattern holds for any agency with fixed monthly costs and invoices that arrive on different dates. One owner put it in a thread title: "Net 30 payments are killing my cash flow." It's rarely the clients who are slow. It's the terms the agency agreed to.
Which payment terms should you use for retainers, milestones and hourly work?
Match the terms to how the invoice arrives. Retainers go out on the same date every month, so use due on receipt. Milestones depend on a delivery date, so tie the due date to that date. Time-and-materials work is billed after the fact, so keep it short, with net 15.
Retainers: due on receipt, billed in advance. The client knows the amount and the date. Nothing about it is a surprise, so there's nothing to approve and nothing to wait on. See how retainer billing works for the full cycle, including what to do about overage.
Milestones: payable on a stated date. Not "net 30 from invoice", but a due date tied to sign-off: "due 7 days after delivery." The client has a clear moment when the work is theirs and a clear moment when payment is due. See milestone billing for how to set the stages.
Time and materials: net 15. You've already done the work and carried the cost, so a short fuse is fair. Bill fortnightly rather than monthly if the amounts are large, and the wait shortens by half again.
That last one comes from an agency owner I talked to, who bills one client every two weeks on time and materials "because I don't trust them." I'd call that a perfectly reasonable use of billing frequency. You don't need to trust a client to work with them. You need to limit how much you're owed at any moment.
Put whichever you choose in the statement of work, so it isn't a negotiation on the invoice. The SOW template has a payment terms section built for this.
How do you move clients to shorter terms?
Offer shorter terms at the start, in the scope document, as the standard. It's far easier to set net 15 before the first invoice than to ask for it after a client has paid net 30 for a year. If a client insists on net 45 or net 60, price it in, or ask for a deposit to balance it.
A few approaches that work without a fight:
- State terms on the quote, so the client agrees to them at signing.
- Ask for a deposit on projects, and bill the balance on a date.
- Keep net 30 for the one-off big invoice if you must. Anything smaller or recurring goes on shorter terms.
- Remind early. A friendly reminder before the due date isn't pushy. It's how terms stay terms.
If the terms are set and the invoices keep going out on time, the tool matters less than the habit. That said, Handl's retainer billing raises recurring invoices on the cycle, and the AI agent follows up overdue invoices on your schedule, so the reminder step doesn't depend on you remembering.
FAQ
Is net 30 from invoice date or due date?
From the invoice date, unless the contract says otherwise. Print the due date on the invoice so there's nothing to interpret.
Can I charge a late fee on net 30?
You can state one in your agreement, and it's best to do that before the first invoice. Rules on late fees and interest vary by state, so check yours before you rely on one.
What's better for an agency, net 30 or due on receipt?
For recurring retainers, due on receipt. For milestones, a date tied to sign-off. For hourly work, net 15. Net 30 is a fine default for everything else, but it shouldn't be the default for everything.