Invoice Terms That Protect You
Late fees, kill fees, payment windows. The clauses most freelancers skip — and what it costs them when they do.
You sent the invoice. Two weeks later, nothing. You follow up — "it's being processed." Another week. You write again, friendlier this time, hoping that helps. It doesn't. Three weeks of work already delivered, and you're spending mental energy chasing money you've already earned.
Freelancers Union surveys consistently find 71% of freelancers report difficulty collecting payment. The average invoice runs 7.8 days late according to Xero's small business data. A QuickBooks survey found freelancers are owed an average of $17,500 in outstanding invoices at any given time.
Invoice terms — what "on time" means, what happens when it's not, what you keep if the project gets cancelled — are uncomfortable to bring up after the invoice is already two weeks unpaid. Before the project starts, they're just standard practice.
The terms that matter
Payment window: Net 30Payment window terms. "Net 30" means payment is due within 30 calendar days of the invoice date. Shorter windows (Net 15, Net 7) reduce your exposure with new or unknown clients., Net 15, Net 7
"Net 30" means payment is due within 30 calendar days of the invoice date. Bill.com defines it as one of the most common payment terms in B2B agreements. Net 15 (15 days) and Net 7 (7 days) are faster and increasingly common for freelance work.
For most project work, Net 15 is reasonable. For first engagements with a new client, Net 7 reduces your exposure. The shorter the window, the more your late feeA financial penalty on overdue invoices. Standard is 1.5% per month. Its main function isn't the fee itself — it makes "on time" worth something to the client. clause earns its place.
DepositUpfront payment before work begins. Standard is 50% for project work. Commits the client before you've spent an hour — and means you have something in hand before delivering anything. before work begins
Require a deposit before you start. Fifty percent upfront is standard for project work; twenty-five percent for larger retainers. It commits the client before you've spent a single hour on the project, and it means you have something in hand before you've delivered anything.
Late fees
Add a late fee clause. The standard is 1.5% per month on overdue balances (roughly 18% annually), which is the ceiling in most U.S. states, according to Nolo's guide to late payment fees. Some freelancers prefer a flat fee ($25–$50 per week) for smaller projects where percentage-based fees feel disproportionate.
The fee itself matters less than the fact that it exists. Most clients pay on time when there's a financial consequence for not doing so. If you never collect one, that's usually why.
Kill feeA payment owed if a client cancels after work has begun. Typically 25–50% of the remaining balance. It compensates you for time blocked and work already done — not a penalty.
A kill fee (sometimes called a cancellation fee) is a percentage of the remaining balance owed if a client cancels mid-project. Typically 25–50% of unbilled work, depending on how far along you are and how much of your schedule you've blocked.
Without one, a client can cancel after you've committed weeks, and you walk away with only what you've already invoiced. The kill fee means you don't walk away empty.
When final payment transfers ownership
State when intellectual property and ownership of deliverables transfer to the client. The standard: full IPOwnership rights to creative work. The key question: who can use, sell, or modify the deliverables? Standard freelance practice: IP transfers to the client on final payment. rights transfer upon receipt of final payment. Until then, you retain ownership. This is industry standard, but it needs to be written down. Without it, there's ambiguity about what the client can do with work they haven't paid for in full.
Why clients pay on time
Clients pay on time when the terms are clear and the consequences for not doing so are written down before the work starts. Late payment is most common when terms are vague or added after the invoice goes out. Most professional clients expect these clauses. Their absence is the odd thing.
Summary
Add this to your contract or include it on every invoice. Fill in the brackets with your actual terms.
- Payment window: Payment is due within [15/30] calendar days of the invoice date.
- Deposit: A [50%] deposit is required before work begins. The remaining balance is due within [7] days of final delivery.
- Late payment: Invoices unpaid after the due date accrue a fee of 1.5% per month (18% annually) on the outstanding balance, beginning [1/8] day(s) after the due date.
- Cancellation: If the project is cancelled after work has begun, a kill fee of [25–50%] of the remaining project balance is owed within [14] days of cancellation.
- Ownership transfer: Full intellectual property rights transfer to the client upon receipt of final payment. Work delivered prior to final payment is licensed for review only.
LumenBill includes these terms on every invoice by default. Set them once in your account settings and they carry through to every project automatically.
Written by Robin Kelmen with AI assistance. Sources linked inline. Last reviewed February 2026.