Invoicing Glossary

Net 30 is a payment term meaning the full invoice amount is due 30 calendar days after the invoice date. Net 15 and Net 60 work the same way with 15 or 60 days. The count includes weekends, and it's clearest to print the actual due date next to the term.

What Net 30 means, in depth →

Due on receipt is a payment term meaning the client should pay as soon as they receive the invoice, with no waiting period. It's common for one-visit service calls and small jobs. Because "on receipt" has no fixed deadline, some businesses print a short window instead, such as Net 7.

Common payment terms compared →

A late fee is a charge added when an invoice isn't paid by its due date, usually a flat amount or a monthly percentage of the overdue balance, such as 1.5% per month. To be enforceable it generally has to be agreed before the work starts, and state law may cap the amount.

How to charge late fees →

A grace period is a set number of days after the due date during which a payment is late but no late fee applies yet. A 10-day grace period on an invoice due September 1 means the fee starts September 11. Stating it in writing sets expectations before anything is overdue.

Late fees and grace periods →

Past due describes an invoice that hasn't been paid by its due date. The moment an invoice is past due, the follow-up usually moves from a friendly reminder to a firmer past-due notice that restates the amount, the original due date, and any late fee the terms allow.

How to follow up on a past-due invoice →

A deposit is money the client pays before the work starts, usually a share of the total, to secure the booking or cover materials. On the final invoice the deposit appears as a credit against the job total, so the client only owes the remaining balance.

Invoicing a job with a deposit →

A retainer is a payment that reserves a professional's time. It takes two common forms: an advance the client pays upfront and you bill work against, or a fixed recurring fee, often monthly, for a set amount of availability or support. The agreement should say which one it is.

Progress billing is invoicing a large job in stages as work is completed, rather than in one bill at the end. Each progress invoice covers a milestone or a percentage of the job, such as rough-in complete, and the final invoice bills the remainder. It keeps cash flowing on long projects.

A partial payment is a payment for less than the full invoice amount. The invoice stays open for the remainder, and the next invoice or statement should show the original total, the amount received with its date, and the balance still due, so both sides agree on what's left.

Balance due is the amount the client still owes on an invoice after subtracting any deposits, credits, and payments already received. On an invoice with no payments yet, the balance due equals the total. It's the one number the client needs to act on, so it should be the most prominent.

What every invoice should include →

Remittance is the payment a client sends to settle an invoice. A remittance advice is the note that comes with it, listing which invoice numbers the payment covers. Businesses paying several invoices at once rely on it, and it's why a clear invoice number matters on every bill you send.

An invoice number is a unique identifier assigned to each invoice, usually sequential, such as INV-1042. It lets you and the client refer to one specific bill in payments, reminders, and bookkeeping. Numbers should never repeat, and a simple, consistent format makes records much easier to search at tax time.

Invoice fields, in order →

A PO (purchase order) number is a reference the client's business issues to authorize a purchase before the work happens. When a client gives you a PO number, print it on the invoice: many accounts payable departments match invoices to purchase orders and won't process one that's missing it.

A line item is one row on an invoice describing a single charge: what it is, the quantity, the unit price, and the line total. "Labor, 1.5 hrs × $160/hr, $240" is one line item. Separate line items for labor, parts, and fees let the client check the math without calling you.

A real invoice, line by line →

The subtotal is the sum of all line items before tax and invoice-wide adjustments. The total is the final amount after adding sales tax and subtracting any discounts. For example, a $258.50 subtotal with 7% tax is a $276.60 total. Deposits and payments then reduce the total to the balance due.

A worked invoice example →