A quick guide to popular invoice payment terms.
An invoice is a confirmation that a service has been performed or a product was shipped. People can say that invoices are confirmations or receipts, but let's not kid ourselves: most of my clients invoice their customers because they want to get paid - which is why you have to include payment terms on every invoice.
Popular small business invoice payment terms.You can have different terms for payment depending on the customer. Your payment terms on any single invoice should be clear, understandable, and consistent. You should agree on the terms in advance (when you take the order or sign the contract) and your invoice should reflect that. By the way, don't be afraid to use different terms for different line items besides the net amount due stated on your invoice. These are some of the typical terms that my clients use.
Net 30 is the most common invoice payment term, but keep in mind that customers – particularly the larger ones – will likely negotiate Net 45 or Net 60 terms to offer them extended time to pay.
When you give customers a 2/10 Net 30 payment term, you're telling your customer that although the invoice is due in 30 days, you'll give them a 2% early payment discount if it's paid in ten days. If you need to increase your cash flow, giving this incentive for early payment could be a big help. 1/10 or 3/10 means the same thing, except the discount is 1% and 3%, respectively.
EOM and 15 MFI are less common invoice payment terms. I don't see EOM terms offered very much unless it's the due date for a recurring, monthly bill. The idea is to motivate your customers to get cash in by the end of the calendar month, or the same month of billing. Your customers who got their invoices during the first week of the month may not mind, but those who received product on the 29th might have an issue with these terms for payment. Besides monthly recurring invoices, the only practical use of an EOM payment term is if you do all your billing at the beginning of a month. I recommend billing as soon as the work is done – don't wait for a specific day.
Many people advise against using Upon Receipt payment terms because customers tend to just ignore them. When you tell someone "upon receipt," you're basically saying, "I realize that almost everyone pays in 30 days, but you owe me the money now." That said, when people agree to these terms, it can boost your cash flow and give you a head start on collecting the payment because you don't have to wait 30 days. It's for those reasons that I use these terms standard on my company's invoices. If people agree to it and pay me early, why not?
You have to include an invoice payment term on every invoice.Ask any accountant and they'll tell you that a sale takes place once an invoice is sent (assuming you're invoicing timely). But ask any experienced business owner and they'll tell you that a sale actually takes place when the customer’s money is in your bank account. You can invoice your customers all day but if they're not paying you, you're not going to stay in business very long. That's where your invoice’s payment terms come in.
Invoice payment terms by industry.When you state your terms for payment, make sure they're something your customers will recognize. For example, most manufacturers expect 30-day payment terms. My clients in the construction industry could never ask for 30-day terms and usually have to settle for 60- or 90-day terms. Most people dealing with the government expect 90- or 180-day terms. Companies selling commodities, like scrap, want payment within a few days at most. If you ship products to consumers it's not uncommon to ask for COD (Cash on Delivery).
The takeaway here: you shouldn’t do anything out of the ordinary or you'll wind up creating confusion and risk receiving a late payment. Talk to others in your industry, ask questions at trade shows, do your research.
Enforcing invoice payment terms.If you take your payment terms seriously, your customers will too. When you say Net 30 and a customer doesn't pay, then start charging interest. Hold out on orders or services. In other words, have a formal collection process and policy for late payments. Put customers on credit hold. Have a collection attorney waiting in the wings. If a customer is a known late-payer, then up your prices to cover the additional time and effort it takes to collect from them. Or take a deposit up front. Or, depending on the size of the customer and the headaches they cause, consider terminating the relationship.
If you're like me and many of my clients, you'll find - even after just a few years of running your business - that dealing with collections for non-payment is too cumbersome and time-consuming. There are plenty of good companies out there who pay their bills and don't monkey around with their suppliers and service providers. Focus on them and you'll sleep well – and with more cash in the bank.
Most importantly, give customers an easy way to pay.Giving your customers an easy way to pay may help you get paid faster. For example, 79% of businesses using PayPal Invoicing reported that they received payment on an invoice within a week from the time the invoice is sent out.1 You can try it for free first using their Invoice Template Generator tool.
The lesson here: Pay close attention to the payment terms on your invoices. My best clients do.
About the author.
Gene Marks, Small Business Expert
Small business keynote speaker and CPA, Gene Marks helps small business owners, executives and managers understand the political, economic and technological trends that will affect their companies so they can make profitable decisions.
1Source: comScore, based on a survey of 1,226 US and Canadian small- and medium–sized business owners asked how long on average it takes to receive a payment on an invoice from the time the invoice is sent out, using their primary invoicing tool, December 2017. 320 of surveyed businesses are currently using PayPal.
Frequently asked questions.
You can pay a money request or invoice by clicking Pay Now in the email we sent you.
If you don’t have a PayPal account, you can create a new one before you pay. If you don’t want to create an account, you can pay using a debit or credit card.
- Check your email inbox for an email from us that includes the money request or invoice.  >
- Click the Pay Now button in the email. (If you don’t see it, click the link in the email, or copy and paste the link into your browser’s address bar.)  >
- If you already have a PayPal account, enter your password and click Log In.  >
- Review the money request or invoice, and then click Pay Now to complete your transaction.
- To create a new PayPal account and pay using your new account, click Sign In and follow the instructions.  >
- To pay without creating a PayPal account, click debit or credit card.
If you don’t have the email we sent you, you can pay your money request or invoice by logging in to your PayPal account. You’ll see the money request or invoice in your Activity.
Top 5 Invoice Payment Terms
Send professional estimates to give your customers the expected cost and description of your goods or services. PayPal estimates let your customers easily make approvals or request changes.Creating estimates is similar to creating invoices. Just like invoices, you can add your logo, save item descriptions, work from templates, and customize the estimate number. You can save estimates as templates for future invoices and estimates. Learn how to create invoices.
What happens after I send an estimate?When you send an estimate through PayPal, your customer will receive an email notifying them of the estimate and allowing them to view the estimate details. The customer will be able to accept the estimate or request changes.
When a customer accepts an estimate, you’ll get an email notifying you. You’ll be able to convert the estimate into an invoice.
If your customer requests changes, we’ll let you know with an email. Your customer can include a note about these changes. When you update the estimate, your customer will receive an email notification asking them to review and accept your changes.
If needed, you can always cancel your estimate. When you cancel an estimate, your customer will receive an email notifying them of the cancellation.
Can I update an estimate that the customer already accepted?If you update the details on an estimate after a customer has accepted it, the estimate status will revert to “Sent.” This ensures that your customer knows about the updates and accepts your changes.
Can I convert estimates into invoices?Convert your estimate into an invoice at any time. Your customer doesn’t need to accept the estimate through PayPal for you to convert it into an invoice.
When you convert an estimate, all details—including your customer’s email, item descriptions, discounts, terms, etc.—automatically populate a draft invoice. The same goes for any payment options you’ve selected, such as partial payments or tips. You’ll be able to edit and preview this invoice before sending it to your customer.
Do PayPal’s terms and conditions apply to estimates?PayPal estimates are a convenient tool to make it easier for you to communicate with your customers. All estimates and updates are between you and your customer and PayPal isn’t a party to them. You’re entirely responsible for the details therein, whether they’re binding or not, and any understanding you reach with your customers. You take full responsibility for your use of PayPal estimates.
PayPal invoices are easy to create. Just enter your customer’s email address. Then add an item with its quantity and amount. Add as many items as you like. You can include personalized notes, terms and conditions, discounts, or any attachments your customer might need.
When you’re finished, click Preview to see how your invoice will look for your customer.
How do I send invoices?
You can send PayPal invoices to any email address in the world. When your invoice is ready, just click or tap the Send button and PayPal’s platform will send an email notification with a secure link to the invoice directly to your customer. If they have a PayPal account, your customer will also receive notifications about the invoice when they log into their account.
How do I share invoice links?
You can also share links to invoices directly with your customers. On the desktop experience, click Share link to invoice under the Send action. You’ll get a link that lets your customer view and pay the invoice. You can copy the link and your invoice becomes payable. Then share it by email, text, or messaging app. Because invoices contain your customers’ personal information, don’t share the invoice link on a public site.
To share the link again, copy it from your list of invoices by clicking the three-dot icon for the invoice. Or get the link by opening up the invoice details.
How do I send invoices to multiple customers?
Send the same invoice to up to 100 customers by clicking Multiple customers and entering each email address in the Bill to field. We’ll send a separate, payable invoice to each customer.
How do I import a batch of invoices?
Create and send a batch of multiple invoices by importing a CSV file if the feature is available in your country. Use our spreadsheet template to fill out the invoice details for each customer. For each invoice, include a customer email address, item name, and item amount. After you import the spreadsheet file, you can view a summary of the imported invoices before sending them. Once you send the file, we’ll email each customer a secure link to pay their invoice. For customer security, PayPal limits the number of invoices you can send in a single day.
Learn more about batch invoices.
Can I manage PayPal Invoicing from my mobile?
You can create, send, and manage invoices on both desktop computers and mobile phones. You can also send and manage invoices on the go with the PayPal Business mobile app. Get the mobile app from the Apple Store or Google Play. Learn more.
What are quick invoices?
Quick invoices let you send easy, professional payment requests on your mobile phone. They streamline invoice creation so you can quickly share a link to an invoice with your customer. Your customer will still get a professional invoice including your default business information.
How do I create an Invoice?
1. Log in to your PayPal Business Account.
2. Click Pay & Get Paid.
3. Click Create and Manage Invoices.
4. Click Create Invoice.
5. Type in your customer's information.
6. Select the type of invoice and currency.
7. If needed, add shipping by checking the shipping box.
8. To add line items, click the + icon.
9. Add any notes or click More options tto add photos.
10. You can also add your logo to the invoice.
11. Add any due dates, discounts, shipping fees, taxes, etc.
12. Click Send.
Once the invoice has been paid, you'll see its status change in your dashboard.
How do I create and send invoices on the PayPal App?
1. TapPayments, the tap Get Paid.
2. Tap Send Invoice.
3. Tap Invoicing, and tap Create New Invoice.
How do invoices for shippable items work?
If you’re shipping an item or need your customer to give a shipping address, check the Items will be shipped box when you’re creating your invoice. You can then add any shipping costs. When your customer pays, you’ll be able to add tracking information when you ship their order.
How do I schedule recurring invoices?
You can set invoices to repeat weekly, monthly, yearly, or at a custom interval. When you start a recurring series of invoices, the customer will immediately receive the first invoice. (You also can schedule the recurring series to start at a future date.) The following invoices in the series will issue around 7:00 AM in your time zone according to frequency that you set.
Can I cancel a recurring invoice series?
You can cancel a single invoice within a recurring series or the entire series of invoices. To cancel an invoice, tap the three-dot icon for the invoice within your list of invoices. You can also cancel the invoice from its details page. When you cancel an invoice within a recurring series, we’ll ask if you want to cancel the single invoice or the entire series.
How do I send invoices across national borders?
There’s no extra step to send invoices across national borders. You can send PayPal invoices to any email address in the world.
If your customer has a PayPal account, we’ll display the invoice and email notification in their preferred language. If your customer doesn’t have a PayPal account, we’ll send the invoice and notification email in the language of your account. You can also specify a different language by editing your customer’s contact info when you create the invoice.
Fees vary by country or region. See seller fees.
Depending on the loan terms you choose, you must pay at least 5% or 10% of your total loan amount (loan + the fixed fee) every 90 days.
The 5% minimum applies to loans estimated to take 12 months or more to be repaid, based on your business’ past PayPal sales and other factors. The 10% minimum applies to loans estimated to be repaid within 12 months.
For most of our customers, regular automatic repayments easily cover the minimum and this is never an issue. But if you do get behind, you can make additional payments on the PayPal Working Capital website.
If you do not meet the minimum payment requirement and your loan goes into default, your entire balance could become due and limits could be placed on your PayPal account.
Please see Section 12 (Account Terms) of our Terms and Conditions to learn more about default.
Tip: You can make additional payments or even pay the loan in full without any penalty.