Invoice payment terms explained [2025]

You’ve sent the invoice. The work’s done, the client’s happy, and now you wait. Days turn into weeks, and that “Payment Pending” line in your accounting software starts to worry you. It is common for Australian businesses to come across such scenarios. But as one might assume, it might not always be a client-side delay. There could be instances where unclear payment terms leave too much room for delay.

In this blog, let us cover some of the common payment terms, what they mean, and what an actual invoice generally looks like, in order to have a more streamlined "invoice sent → money received" invoicing process.

What are invoice payment terms?

Invoice payment terms are the agreed-upon rules between your business and your customer that set out exactly how and when payment will happen. In Australia, they’re part of the sales contract and are covered by Australian contract law. They are usually placed right on the invoice, so there’s no confusion, and both sides know what to expect.

Standard terms often specify the payment method, whether you offer credit, and any related credit terms, such as 7, 21, or 28 days to pay¹. Payment terms can also include your debt collection policy, detailing what steps you’ll take if a customer fails to pay. Clear terms help protect your income and manage cash flow.

12 Common invoice payment terms used by Australian businesses

Here’s a list of the most frequently used invoice payment terms in Australia²:

1. Immediate Payment – Common in retail and hospitality, it requires payment as soon as the invoice arrives, reducing processing delays.
2. Net 7 – Payment due 7 days after the invoice date, often used by trades, startups, and small businesses.
3. Net 14 – A popular term for professional services and contractors, balancing client processing needs with cash flow timing.
4. Net 30 – The standard for many medium-to-large businesses and government contracts in Australia.
5. EOM (End of Month) – Sets due date as the end of the month of invoice issue; often paired with Net 30 as "EOM + 30."
6. 2/10 Net 30 – Offers a 2% discount if payment is made within 10 days; otherwise, full payment should be made within 30 days.
7. PIA (Payment in Advance) – Means the customer pays for goods or services before they are delivered or work begins. In Australia, this term is common in industries with high customisation, large material costs, or where the supplier needs to secure commitment before production.
8. X MFI (Xst of the month following invoice date): A less common but sometimes used variant among Australian businesses, mostly in wholesale, distribution, and long-standing supplier relationships where billing cycles are tied to monthly schedules. For example, “21 MFI” would mean “21st of the month following invoice date.”
9. No Credit (Pay on Delivery) – Payment required on delivery or completion; minimizes risk for new or high-risk clients.
10. Upfront Percentage Deposit – An initial percentage is paid beforehand, with the remainder upon completion.
11. Instalment Agreements – Payments spread over specified intervals.
12. Net 60 and Net 90 – A longer-term payment window, often used for long-duration contracts or bulk procurement arrangements.

Examples of payment terms in an invoice

Example 1

This example shows two of the most common payment terms used by Australian ABC Supplies Pvt Ltd has just completed a bulk order of industry materials for a mid-sized construction company in Melbourne. The order was delivered on 14 August 2025, with the total cost coming to AUD 5,000.

Because this is a trusted, repeat customer, ABC Supplies has offered standard Net 30 terms, giving the client until 13 September 2025 to make payment. To encourage quicker settlement, they’ve also added a 2/10 Net 30 incentive, meaning the client can take 2% off the invoice (paying AUD 4,900 instead of AUD 5,000) if they settle within the first 10 days.

By combining these two terms, ABC Supplies gives the client flexibility while improving the chance of early payment, which helps keep their own cash flow healthy.

Example 2

ABC Supplies Pvt Ltd has received a custom order from a new client, a Brisbane-based fabrication company, for specialised industrial materials worth AUD 12,000. Because the order is from a new client and involves high upfront material costs, ABC Supplies has set Payment in Advance as the term. This means the full amount must be paid before production begins.

This approach ensures the supplier can cover materials and labour without dipping into their own funds, protects them from non-payment, and confirms the client’s commitment before work starts.

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A well-structured invoice sets clear expectations by outlining exactly what’s owed, when it’s due, and how payment should be made. This reduces misunderstandings and helps payments arrive on time. It’s particularly important when working with overseas clients, where currency conversion and international transfers can snowball into longer waiting periods.

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This general advice does not take into account your objectives, financial circumstances or needs and you should consider if it is appropriate for you.

Sources:

1. Payment terms Australia
2. Immediate Payment