Payment Terms Glossary

Deposit

A partial payment made upfront by a client before work begins, securing the service provider's time and covering initial project costs.

Due on Receipt

A payment term indicating that the invoice must be paid immediately upon receiving it, with no grace period.

Early Payment Discount

A reduction in the invoice amount offered to a buyer in exchange for paying before the standard due date, typically expressed as a percentage discount for payment within a shorter window.

Installment Payment

A payment arrangement in which the total amount owed is divided into multiple smaller payments made at regular intervals over an agreed period of time.

Late Payment Fee

An additional charge added to an invoice when a client fails to pay by the agreed due date, intended to compensate the business for the delay and incentivize timely payment.

Net 30

A payment term indicating that the full invoice amount is due within 30 calendar days from the invoice date.

Net 60

A payment term indicating that the full invoice amount is due within 60 calendar days from the invoice date.

Net 90

A payment term indicating that the full invoice amount is due within 90 calendar days from the invoice date.

Payment Milestone

A defined project stage or deliverable that triggers a payment from the client, linking money received to work completed rather than to calendar dates.

Retainer

An upfront fee paid by a client to secure ongoing access to a service provider's time and expertise, typically billed monthly at a fixed rate for a defined scope of work.