Construction Invoice Payment Terms: Net 30, Due on Receipt and Milestones

“Net 30” is on most contractor invoices because it was on the template. It is the wrong term for most of them. A deposit with net 30 defeats its purpose, a $600 service call with net 30 is a free loan, and a $40,000 remodel billed once at the end with net 30 means you carry the job for two months. This guide matches the term to the invoice, shows how to write it so it is enforceable, and covers the prompt-payment laws that apply when you are paid by a general contractor rather than a homeowner.

What the terms mean

• Due on receipt: payable now. Right for deposits, service calls, small repairs and any invoice under about $2,000.
• Net 7, net 10, net 15: payable within that many days of the invoice date. Right for balance and milestone invoices to homeowners.
• Net 30: payable within 30 days. The commercial default, and what most GCs and property managers will expect. Rarely right for residential work.
• 2/10 net 30: 2% discount if paid within 10 days, otherwise net 30. Works on commercial accounts with slow payment habits; on a $20,000 invoice you are paying $400 to get paid three weeks sooner.
• Milestones: payment tied to visible progress (deposit on approval, draw at rough-in, draw at finish, balance on completion). Right for anything longer than two weeks.

Match the term to the invoice

Deposit invoice: due on receipt, every time. The deposit exists to fund the start; a deposit that can legitimately arrive in 30 days funds nothing.

Service and repair work: due on receipt, collected at the door or from the pay link before the truck leaves. If you invoice later, net 7 is the longest that makes sense.

Residential project balance and draws: net 7 to net 15, written as a date (“due October 24”), with the pay link. A date on the invoice beats a term, because the customer does not have to do arithmetic and a reminder can quote it.

Commercial and GC work: net 30 is normal, but read the contract. Pay-when-paid and pay-if-paid clauses, retainage and the prompt-payment statute all change what the term really means.

Write the term so it holds up

A payment term is enforceable when it was agreed before the work, not when it first appears on the invoice. Put the terms on the estimate the customer approves: deposit, schedule, due dates and the late fee. Then every invoice simply repeats them. The invoice itself should carry a due date in plain words, the amount, the accepted payment methods and the late-fee sentence from the agreement. “Net 30” alone, with no date and no consequence, is a suggestion.

Prompt-payment laws when a GC or owner pays you

Most states have a prompt-payment statute for construction. On public projects it binds the agency; on private projects it typically sets a default deadline for the owner to pay the prime contractor and for the prime to pay subs, plus an interest rate on late payment, unless the contract says otherwise. Examples from the published summaries: Texas owners pay within 35 days of the invoice with 1.5% per month interest; Pennsylvania owners pay within 20 days with 1% per month after a 7-day grace; Maryland sets 9% per year from the 31st day. Several statutes also award attorney fees when payment was withheld unreasonably.

Two cautions. Many statutes let the contract override the default, so a net 60 you signed is a net 60. And residential work is often excluded, so the homeowner relationship still runs on your written terms and your state’s general rules.

Payment methods change the real term

A term is only as good as the way the customer can act on it. An invoice with a pay link that takes a card or an ACH bank transfer gets paid from the phone the moment the reminder arrives; an invoice that asks for a mailed check adds a week before you see anything. Card payments settle to your Stripe balance at once and ACH takes about four to five business days; neither one costs the customer anything extra, and on larger invoices ACH is far cheaper for you. Say which methods you accept on the invoice and make the fast one the default.

A simple default set

1. Deposit: due on receipt, collected on approval.
2. Draws and balance to homeowners: due 7 days from the invoice date, written as a date.
3. Commercial accounts: net 30 unless the contract says otherwise; invoice the day the milestone is met.
4. All invoices: a pay link, the accepted methods, and the late-fee sentence from the agreement.