Payment terms: due on receipt vs. net 30

For most residential home-service work, payment due on receipt, meaning at completion, is the right default: the homeowner is there, the value is clear and you avoid chasing money. Net 15 or net 30 terms make sense for commercial customers, property managers and general contractors who pay through an accounts payable process, but only after you've decided they're a good credit risk. Write your terms on every quote and invoice, and set them per customer rather than giving everyone the same.

Here's how to choose, how to decide who gets credit, and how to keep net terms from turning into slow payment.

What do payment terms like "net 30" actually mean?

Payment terms tell the customer when the invoice must be paid:

Due on receipt: payable as soon as the customer gets the invoice. For field work, this usually means at completion.
Net 7, net 15, net 30: the full amount is due within 7, 15 or 30 days of the invoice date.
Net 45 or net 60: longer terms that some larger commercial customers ask for.
Early-payment discounts, written like "2/10 net 30": a 2 percent discount if paid within 10 days, otherwise the full amount within 30. More common in commercial and supply businesses than residential service.

Whatever you choose, the invoice should show an actual due date, not just the term. "Due October 30" is clearer than "net 30."

Why is due on receipt the best default for homeowners?

Residential customers don't have an accounts payable department. They pay when it's convenient, and the most convenient moment is when the tech has just finished and is standing there.

Due on receipt works well because:

Cash flow. You've already paid for parts and labor. Getting paid the same day keeps your bank balance healthy.
Less office work. No reminders, no statements, no phone calls.
Fewer disputes. Questions get answered on the spot while the work is fresh.
Fewer bad debts. The longer an invoice sits, the less likely it is to be paid in full.

Tell customers when they book that payment is due at completion, and which methods you accept. When nobody is home, send the invoice with a pay link the same day, with a short due date.

When do net terms make sense?

Some customers can't pay at completion, no matter how easy you make it, because of how their business works:

Property managers and landlords who approve invoices before paying
General contractors paying you as a subcontractor, often on their own pay cycle
Commercial customers like restaurants, offices and retail stores, who pay through an accounts payable process
Schools, HOAs and public entities, which often have fixed payment schedules
Homeowners in special situations, such as insurance-funded repairs, by agreement

For these customers, refusing net terms can mean losing good, steady work. The answer isn't to avoid them. It's to decide carefully who gets them.

How do you decide who gets credit?

Treat net terms as credit, because that's what they are. You're doing the work now and getting paid later.

Before offering terms to a new commercial customer:

Ask for basic business information: legal name, billing address, who approves invoices, and how they pay.
Ask about their process: do they need a W-9, a certificate of insurance, a purchase order number on every invoice?
Check references from other vendors if the work is significant.
Start with a short term or a limit. For example, net 15 up to a set amount, increasing as they build a history of paying on time.

Set a credit limit, the most you're willing to have outstanding with that customer at once. If they go over it, new work waits until they catch up.

How do you get net-terms customers to pay on time?

Most slow payment from commercial customers isn't intentional. Invoices get lost, sent to the wrong person, or rejected because something's missing. A few habits help:

Send invoices to the right person. Get the accounts payable email, not just the site contact.
Include everything they need: purchase order number, property address, unit number, work order number, and a clear description of the work.
Invoice promptly. The clock starts when they receive the invoice. A week's delay in sending is a week's delay in getting paid.
Send a reminder before the due date, and another right after it passes.
Review your accounts receivable aging every week, so you see who's drifting past due before it becomes a problem.
Offer bank payment. For larger commercial invoices, bank transfers are often easier for the customer and cheaper for you.

If an invoice is going unpaid, see our guide on handling unpaid invoices and collections politely.

Should you charge late fees?

Late fees can encourage on-time payment, but they come with rules:

They must be agreed in advance. Put the fee in your terms and on the quote or contract, not just on an overdue invoice.
They are regulated. Many states limit how much you can charge as a late fee or interest, and the rules for consumers can differ from those for businesses.
They can hurt relationships. A good commercial customer who was a few days late because of a lost invoice may not appreciate a fee.

Check your state's rules, or ask an attorney, before you add late fees to your terms. Many owners find that clear terms and prompt reminders do most of the work.

What should your written payment terms include?

Put a short version on every quote and invoice, and a fuller version in contracts with commercial customers:

When payment is due
Accepted payment methods
Deposit requirements on larger jobs, if any
Late fee or interest terms, if any and if allowed in your state
What happens to new work if the account is past due
Who to contact with billing questions

Example for residential customers:

Payment is due on completion. We accept card, bank transfer, cash and check. Jobs over $2,500 require a deposit on approval.

Example for a property management customer:

Net 15 from the invoice date. Please include the work order number with payment. Accounts more than 30 days past due will be placed on hold for new non-emergency work.

FAQ

Should I offer net 30 to homeowners? It's rarely necessary. If a homeowner can't pay at completion, a short due date with an online pay link, or a payment plan or financing for large jobs, usually works better than open-ended terms.

What's the difference between payment terms and a payment plan? Terms set when one invoice is due. A payment plan splits one bill into several payments over time, usually for a customer who can't pay it all at once.

Can I require a credit card on file? Some businesses do for recurring service or for customers with a history of late payment. Tell the customer clearly when and how the card will be charged.

Do early-payment discounts work? They can with commercial customers who track them. Make sure the discount is something your margins can afford.

How ServFlo helps

In ServFlo, each customer can have their own payment terms: due on receipt, net 7, 15, 30, 45 or 60, or a custom number of days. New invoices get the right due date automatically. You can set a credit limit per customer and get a warning when booking or invoicing someone over it, and the receivables aging report shows every customer's open invoices by age. On the Connect plan and above, overdue reminders go out at 1, 7 and 14 days and stop when the customer pays. Every invoice has a pay link for card or bank. See payments, reports and pricing.

Payment terms for home-service businesses: due on receipt vs. net 15 or 30