Payment Terms
Payment Terms Glossary for Small Businesses
Short answer
A reference of the payment-term abbreviations and clauses that appear on small business invoices, written in plain English.
Invoicing language is full of abbreviations that nobody ever explained to you. This glossary covers the terms that actually appear on small-business invoices in the U.S. — what each one means, when it is used, and how it affects your cash flow.
Net terms
Net X — Payment is due X calendar days after the invoice date.
Net 7 / 10 / 15 / 30 / 45 / 60 — Specific Net term lengths. Net 30 is the B2B default.
EOM (End of Month) — Payment is due at the end of the month in which the invoice is dated.
Net 30 EOM — Payment is due 30 days after the end of the invoice month. A June 1 invoice is due July 30.
Net 10 prox / Net 30 prox — Due on the 10th / 30th of the following month.
Immediate-payment terms
Due on Receipt (DOR) — Payment is expected as soon as the invoice is received.
COD (Cash on Delivery) — Payment is collected at the time goods or services are delivered.
CIA (Cash in Advance) — Payment is required in full before work begins.
PIA (Payment in Advance) — Synonym for CIA.
CWO (Cash with Order) — Payment is required at the time an order is placed.
Discount terms
2/10 Net 30 — 2% discount if paid within 10 days, otherwise full balance due in 30 days.
1/15 Net 30 — 1% discount if paid within 15 days, otherwise full balance due in 30 days.
These early-payment discounts cost you margin but accelerate cash. Calculate the effective annualized cost before offering them.
Project & construction terms
Retainage / Retention — A percentage (typically 5–10%) of each progress payment held back by the customer until the project is fully complete.
Progress billing / Milestone billing — Billing in installments tied to project milestones (e.g., 25% at signing, 25% at framing, 25% at drywall, 25% at completion).
Deposit / Down Payment — A portion of the total collected before work begins, applied to the final invoice.
Change Order — A signed amendment to the original scope and price. Must be agreed to in writing before the additional work begins.
Late-payment terms
Late Fee / Service Charge — A surcharge applied after the grace period (commonly 1–1.5% per month).
Grace Period — A short window after the due date during which no late fee accrues (typically 5–10 days).
Past Due — Any invoice that has passed its due date.
Aged Receivables — Outstanding invoices grouped by how late they are (0–30 days, 31–60, 61–90, 90+).
Frequently asked questions
What does 'Net 30 EOM' mean?
Payment is due 30 days after the end of the month in which the invoice was issued. A June 1 invoice with Net 30 EOM terms is due July 30.
What is the difference between a deposit and a retainer?
A deposit is applied against a specific invoice or project total. A retainer is a recurring or upfront payment that secures access to your services over a period of time and may or may not be drawn against specific deliverables.
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Sources & further reading
Primary sources we consulted when writing and reviewing this guide.