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Invoicing and payment terms

Payment terms – commonly used invoice payment terms and their meanings

Your invoice payment terms and conditions can impact the number of days it takes you to get paid. Without them, you aren’t communicating when a payment is expected, as well as other conditions like your preferred payment method and any consequences of late payments.

Invoice payment terms

This list explains the payment terms most commonly used on invoices.

Net monthly accountPayment due on last day of the month following the one in which the invoice is dated
PIAPayment in advance
Net 7Payment seven days after invoice date
Net 10Payment ten days after invoice date
Net 30Payment 30 days after invoice date
Net 60Payment 60 days after invoice date
Net 90Payment 90 days after invoice date
EOMEnd of month
21 MFI21st of the month following invoice date
1% 10 Net 301% discount if payment received within ten days otherwise payment 30 days after invoice date
CODCash on delivery
Cash accountAccount conducted on a cash basis, no credit
Letter of creditA documentary credit confirmed by a bank, often used for export
Bill of exchangeA promise to pay at a later date, usually supported by a bank
CNDCash next delivery
CBSCash before shipment
CIACash in advance
CWOCash with order
1MDMonthly credit payment of a full month’s supply
2MDAs above plus an extra calendar month
ContraPayment from the customer offset against the value of supplies purchased from the customer
Stage paymentPayment of agreed amounts at stage

When creating your invoice payment terms, bear in mind that if you have clear, concise and consistent payment terms, it is more likely that your invoice will be paid in time and this will have a positive impact on your business cashflow.

For further information on contract terms and conditions see setting terms and conditions and credit checking your customers and setting credit limits.

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