To ensure fast payment, most small businesses use invoice payment terms. Because they are an important component of managing funds and a critical accounting job, these payment terms should be included on every invoice presented.

Almost every invoice ever produced by small businesses has a payment term that indicates when payment is due. Most small business owners, especially those who are just starting, find it challenging to settle on common invoice payment terms for their company.

What are the Invoice Payment Terms?

An invoice is a written record that converts the actual giving or receipt of money into accounting data. It is the principal document that lists the items or services purchased or payment is made with the money. However, a bill is only beneficial to your company if the conditions are met. It is considered legal documentation if it includes the names of the parties, a description of the products or services, a price, and invoice payment terms.

Payment terms are essential as they ensure on-time or immediate payment, which improves revenue flow. Many supplier and clients dispute are caused when payment is due. To avoid this, you must understand efficient invoice payment conditions.

Payment terms on an invoice inform a company’s clients about when they must pay and how they might do so. Firms can include a variety of payment conditions on their invoices. Payment terms are important to be added to an invoice since they allow you to properly calculate your cash flow problems and timely payments.

This is based on when and how much money is deposited into your account. Payment conditions are required since you must be notified of a customer’s past-due status. Similarly, you want to know when your suppliers will be paid faster for supplies purchased.

Example of Payment Terms on an Invoice


For easy cash flow and growth of your business, you need to create invoices tactically. Here are some examples of invoice payment terms that are useful to be found on invoices:

Cash Flow

This payment word refers to invoice terms that are due in cash. The word “cash account” implies that you will not provide credit to your clients and that they will be unable to use any preferred payment method, including credit.

Cash in Advance (CIA)

Cash in advance states the part of the payment method that has been paid in advancement in the form of cash to the business from the clients. This outlines both when you should anticipate a payment in advance, which is before work begins, and how the client can pay you, which is in cash.

Cash Next Delivery (CND)

You can specify payment conditions that compel your clients to pay their professional invoices in full before the next delivery if the client receives goods or services regularly.

Cash on Delivery (COD)

This invoice payment term is used if you require immediate payment. If your client fails to pay, you have the right to reclaim the commodities or intellectual property that you delivered.

Contra/Contra Payment

It is typical in business for two companies to owe each other money. The contra/contra terms allow the corporation owing the greater amount to settle the obligation by paying the difference between the two amounts owed in this case.

End of Month (EOM)

It is typical in business for two companies to owe each other money. The contra/contra terms allow the corporation owing the total amount to settle the obligation by paying the difference between the two amounts owed in this case.

Net 30

The “net” technique is one of the greatest terms for invoice payment because it is open and adaptable. Net 30  is one example of how you could set preset payment due dates based on the date of your invoice. You can choose any amount for your invoicing terms to be paid within the time allotted. Net 30 is one of the payment terms used by businesses with lengthier payment terms so that clients pay within 30 days.

Examples of NET terms include the following:

  • Net 7 (due 7 days)
  • Net 10 (due within 10 days)
  • Net 60 (due 60 days)
  • Net 90 (due 90 days)

3/15 Net 30

Offering cash incentives is one of the simplest ways for small company owners to encourage consumers to make on-time payments. Customers that pay within a fixed number of days may be eligible for discounts. Encourage customers to pay their bills on time, for example, within 15 days of the due date, so that they may be eligible for a 3% discount. It is one of the best invoice payment terms to maintain the company’s cash flow around the payment date.

Payable in Advance (PIA)

Similar to the previous terms for invoicing cash in advance (CIA) permits you to accept payments in advance for your products or services. The primary difference is that when taking partial payments, this expression is usually used. You may, for instance, demand that your customer pays 25% of the invoice upfront and the remaining balance when the product is delivered.

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How to Use Payment Terms?

When evaluating a contract, payment terms are important. The speed at which your clients pay you should be increased while customer annoyance should be maintained to a minimum. A fair set of payment terms should be advantageous to both parties.

Keep in mind that your payment terms should line up with your business objectives as you start to invoice clients. A crucial element of beginning and operating a successful business is selecting appropriate payment arrangements.

You must first understand how to make the best invoice for your business before you can employ payment terms to make customers pay.

Here is how you can use payment terms wisely to receive payments on or before the invoice date for your small business:

Communicate Before You Invoice

Every interaction, particularly one between a small business owner and their consumers, is dependent on efficient communication. A new firm contract should always include payment conditions. You must also communicate any interest charges applied on late payments or bank transfers so your client is on the same page with you. You can also communicate payment details before you begin work.

Make a Point of Labeling Your Invoice Date Properly

Your entire invoice should be readable and easy to understand, including facts like the invoice number, product description, invoice total, and other important information. You must indicate your date while accepting invoice payments. Because the ultimate invoice date of payment is usually based on this day. Before sending out your bills, double-check their accuracy. To save time, you might use an invoicing system to automate these administrative steps, allowing your clients to send payment as soon as they receive the invoice. This also avoids your clients from any late fees acquired if you charge interest.

Describe Any Available Early Payment Discounts

Offer a discount for early payment to your clients to get paid on time i.e. on the date listed. As a result of these early payment incentives, you may be confident that you will have adequate operating funds to keep your firm afloat. The best aspect is that you will strengthen your ties with your consumers by rewarding quick payment.

Make Consistent Payments

Depending on your industry, you may have repeat consumers. You may set up recurring invoices with the correct digital tools so that your customer pays unpaid invoices automatically, avoiding the fear of any late payment, fees, and other difficulties that can interrupt your cash flow. It ensures accurate cash flow projections.

Set Up Regular Alerts

You may avoid late payments by sending clients an automatic reminder to pay on time in compliance with longer payment terms of service. Moon Invoice makes this simple. This functionality is offered in conjunction with our electronic payment alternatives. You are more likely to receive money on schedule if your client can complete early payments efficiently. With regular alerts, you can get any invoice paid faster.

Describe the Ways You Can Pay

You can provide consumers with a variety of payment choices that are tailored to their requirements if you want them to make payments on time. This corporate accounting strategy allows your consumers to spread out payments over a longer period.

Consider Invoice Factoring

Some companies offer “invoice factoring.” These organizations pay between 80% and 90% of the invoice full amount of unpaid invoices. They then attempt to collect money owed by late payers from outstanding invoices. It is a method to interest invoice for your benefit.

Which Invoice Standard Payment Terms are Best?

Any business needs ongoing working capital to cover labor and shipping costs, as well as cash for possible future growth. As a result, when billing your consumers or clients, keep the outflow in mind.

What are the conditions of your bills? Is it possible for me to purchase something before the deadline?

The running systems of your organization are significantly dependent on monetary input. Keep this in mind while deciding on detailed payment terms important for an invoice. When deciding on the appropriate payment terms refer to be included on your company’s invoices, consider one that assures optimal revenue flow.

How to Improve Your Payment Terms?

Here are some key takeaways for improving invoice payment terms:

Offer Discounts to Promote Early Payment

Many businesses may offer discounts to early payers to entice clients to make payments on time. They can now pay in advance thanks to this.

Online Billing

Using cloud accounting software, you may rapidly email invoices to your clients, hastening the payment process. Allow online payments for convenience and to avoid payment lag.

Utilize Technology

You can predict when your clients will pay using cloud forecasting technologies. Using this information, the finance team can give the right customers priority. Technology can also open various faster payment options for your business to utilize and receive full payment.

Analyze Your Customer Behavior

To identify clients who frequently make late payments, every business should routinely audit its clientele. These clients are a liability, not a resource. Such clients might eventually go.

How to Get Paid Faster Using Moon Invoice Payment Terms?

Creating excellent invoices for big projects might be difficult, but with Moon Invoice, you can automate so many stages that it becomes a simple task that can be completed in minutes. Moon Invoice not only provides customizable invoice templates that allow you to produce many invoices by just entering the basic facts of your customer, but you can also save the customer details ahead of time to make the process quicker.

With a tool like Moon Invoice, you can easily set up payment terms and add details to your invoice as needed for your business.

For further convenience, here are the steps to creating an invoice on the Moon Invoice app:

  1. Log in to the Moon Invoice invoicing software and enter the necessary business information to ensure a smooth invoicing process.
  2. Start personalizing your invoice by selecting it from the Sales Module.
  3. Fill in the required basic information as well as the payment terms.
  4. On your invoice, mention the Terms & Conditions and Describe Notes.
  5. Remember to include your payment options and ways of payment for seamless transactions.
  6. You can save the invoice once you’ve entered all relevant information and monthly credit payment terms.


It can be hard to create an accurate invoice and detailed terms from scratch. But by employing user-friendly accounting software it can be automated easily. Setting up an invoicing strategy with consistent payment terms is a vital step in business accounting. It prioritizes your payments and establishes clear expectations for your customers, resulting in more reliable and productive customer relationships.

Using innovative solutions such as Moon Invoice and a free invoice template, you can create and use invoices to your benefit and receive early payments on the invoice date.