Freelance payment terms explained: Net 15 vs Net 30, deposits, and late fees

Payment terms tell your client exactly when they owe you money and what happens if they are late. They are one of the most important things in a freelance contract — more important, in practice, than many clauses that feel weightier. Vague payment terms are the single most common source of unpaid invoices: not bad faith, just ambiguity that the client resolves in their own favor.

This guide explains the standard terminology, how to choose the right payment schedule for your work, and how to write these terms into your contract so they are enforceable.

The payment term glossary

"Net X" is the standard notation used across professional services. It means: payment is due X calendar days after the invoice date. Here is what you will commonly encounter:

Term	Meaning	Best suited for
Due on Receipt	Payment due immediately upon receiving the invoice	Small projects, one-off tasks, clients with fast AP cycles
Net 7	Payment due 7 days after invoice date	Quick-turnaround work; rarely standard in corporate contexts
Net 15	Payment due 15 days after invoice date	Most freelance project work — balances speed with client process time
Net 30	Payment due 30 days after invoice date	Standard in corporate procurement; common in larger-company contracts
Net 60 / Net 90	Payment due 60 or 90 days after invoice date	Large enterprise accounts; rarely acceptable for freelancers without a premium for the wait
2/10 Net 30	2% discount if paid within 10 days; otherwise full amount due in 30	Uncommon in freelance; used by vendors to incentivize early payment

Net 15 vs. Net 30: which should you use?

For most independent freelancers, Net 15 is the better default. Here is why: Net 30 means you are extending 30 days of credit to your client — you have done the work and you are waiting a month to be paid. For a large corporation with predictable cash flow, that may be fine. For a one-person freelance business where an unpaid invoice can affect your monthly expenses, 30 days is a meaningful float.

Net 15 is increasingly accepted as standard in the freelance market. Unless you are working with a large enterprise client whose accounts-payable system genuinely cannot process faster, there is no strong reason to accept Net 30 as a default.

If a client insists on Net 30 or longer, you have two reasonable options: accept it and price in the time value of the wait (i.e., charge a bit more than you would for faster payment), or negotiate a milestone-based schedule that keeps you from being entirely at the mercy of their AP cycle.

NYC Freelance Isn't Free Act: what it says about timing

For freelancers working in New York City, the Freelance Isn't Free Act (N.Y.C. Admin. Code § 20-928) has a direct effect on payment timing. If the contract specifies a payment date, the client must pay by that date. If the contract does not specify a date, the client must pay within 30 days of the completion of services. Violating those deadlines exposes the client to double damages plus attorney fees — a significant statutory remedy that goes beyond what a standard breach-of-contract claim would recover.

This is a strong argument for specifying your payment date explicitly in the contract rather than leaving it blank. "Due on receipt" or "Net 15 from delivery" in writing is better than no date at all, even if the law provides a 30-day backstop.

Late fees: how to structure them

A late fee clause does two things: it creates a financial incentive for the client to pay on time, and it gives you a contractual remedy that accrues automatically rather than requiring you to renegotiate the invoice amount when the client is already late.

The most common late fee structure in US freelance contracts is 1.5% per month (which works out to 18% annualized). This rate is widely used because it is significant enough to matter to a client but unlikely to be challenged as a penalty. Some freelancers use a flat late fee instead — $25 or $50 per 30-day period the invoice remains unpaid — which is simpler to calculate and communicate.

A few practical notes on late fees:

• State usury laws — some states cap the maximum interest rate you can charge on overdue commercial invoices. If you plan to charge more than 1.5% per month, check your state's rules. For most freelancers, 1.5%/month is well within any state's limit.
• The fee must be in the contract — you cannot add a late fee to an invoice that does not already reference a late-fee clause in the signed agreement. Surprise fees on a final invoice are not enforceable.
• A grace period is optional but courteous — many freelancers include a 5-day grace period before late fees begin accruing. This protects the client against minor processing delays and reduces disputes over whether a payment that arrived 2 days late is really "late."

Deposits and how they fit into your payment schedule

A deposit is the first payment in your payment schedule — it is due before work begins. Deposits are separate from the net-payment clock, which starts when you send the final invoice. The sequence typically looks like this:

• Signing → deposit due (typically 50% of total fee, non-refundable)
• Work proceeds
• Final delivery → final invoice for remaining balance, Net 15
• Day 16 onward → late fees accrue at 1.5%/month on unpaid balance

The deposit is not subject to net payment terms — it is due on signing or immediately before work begins. The net payment term applies only to the final invoice. This distinction matters: do not write "50% deposit due Net 30" — that means the client has 30 days from signing before they need to pay, which eliminates the protective function of the deposit.

For a full treatment of deposits and what makes them non-refundable, see our guide: how much deposit should a freelancer ask for?

What to write in your contract

A complete payment clause has four elements: (1) the deposit amount and when it is due, (2) the payment schedule for the remaining balance (tied to specific milestones or delivery dates), (3) the net payment period for each invoice, and (4) the late fee rate and when it begins to accrue.

Plain-English example: "A non-refundable deposit of 50% ($[X]) is due upon signing. The remaining balance of 50% ($[X]) is invoiced upon delivery and due within 15 days of the invoice date. Invoices unpaid after 15 days accrue a late fee of 1.5% per month on the outstanding balance."

That is about 50 words. Every number is explicit. There is no ambiguity about when money is owed or what happens when it is late. That is the goal.

Clausio can draft a freelance contract with your specific payment structure built in. You can also review the full clause breakdown in our freelance contract template, or our independent contractor agreement template.

When clients try to change payment terms after signing

It happens: you sign a contract with Net 15 terms, finish the project, send the invoice, and the client replies that their "policy" is actually Net 45 and asks you to reissue the invoice. This is not a policy that applies to you — you have a signed contract with Net 15 terms, and that is what governs.

You do not need to accept a modification. Respond professionally: "Our agreement specifies payment within 15 days of delivery. I'm happy to accommodate a payment plan if there's a cash flow issue, but I'm not able to extend the net period beyond what was agreed." That is firm without being hostile, and it puts the ball in the client's court.

If the client continues to delay after the due date, follow the escalation steps in our guide on what to do when a freelance client won't pay.

The recommended payment structure for most freelancers

If you are unsure what to use as a starting point, here is a structure that works for most project-based freelance engagements:

• 50% non-refundable deposit due on signing, before work begins
• 50% balance invoiced upon delivery of final files or project completion
• Balance due Net 15 from the invoice date
• Late fee of 1.5% per month on balances unpaid after the due date, with a 5-day grace period
• Work product and all files released to client upon receipt of final payment

That last point — withholding final file delivery until payment clears — is a common and legally clean way to maintain leverage on the final payment. It is the contractual equivalent of a mechanic holding your car until the bill is settled. Just make sure the clause is in your contract, not sprung on the client at the end.

FAQ

Related resources

• How much deposit should a freelancer ask for? — why 50% is standard and how to make it non-refundable
• What is a kill fee? — how cancellation fees interact with deposits and payment schedules
• What to do when a freelance client won't pay — the escalation ladder
• What clauses does a freelance contract need? — all ten, with the law behind each
• Freelance contract template
• Independent contractor agreement template
• Build your freelance contract →