Invoicing and payment terms

Payment terms - commonly used invoice payment terms and their meanings

Guide

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 account Payment due on last day of the month following the one in which the invoice is dated
PIA Payment in advance
Net 7 Payment seven days after invoice date
Net 10 Payment ten days after invoice date
Net 30 Payment 30 days after invoice date
Net 60 Payment 60 days after invoice date
Net 90 Payment 90 days after invoice date
EOM End of month
21 MFI 21st of the month following invoice date
1% 10 Net 30 1% discount if payment received within ten days otherwise payment 30 days after invoice date
COD Cash on delivery
Cash account Account conducted on a cash basis, no credit
Letter of credit A documentary credit confirmed by a bank, often used for export
Bill of exchange A promise to pay at a later date, usually supported by a bank
CND Cash next delivery
CBS Cash before shipment
CIA Cash in advance
CWO Cash with order
1MD Monthly credit payment of a full month's supply
2MD As above plus an extra calendar month
Contra Payment from the customer offset against the value of supplies purchased from the customer
Stage payment Payment 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.