Net 30 means you do the work, send the invoice, and wait 30 days to get paid. During those 30 days, you've already paid your crew, bought materials, fueled the equipment, and covered your overhead. You've financed the job out of your own cash — essentially giving your client a 30-day interest-free loan.
Multiply that across three or four concurrent jobs and you've got a significant amount of capital sitting in receivables. The bigger your jobs and the more you grow, the worse this gets. It's one of the main reasons contractors who look busy on the outside are quietly stressed about payroll every week.
Where net 30 came from
Net 30 is a standard that large companies with accounts payable departments created because it serves them. They get 30 days of float on every invoice, they batch payments on a schedule that works for their cash management, and they applied that standard to every vendor regardless of size.
Somewhere along the way it became an assumption in business-to-business transactions — even for small contractors doing direct-to-client residential work where there's zero reason for a 30-day payment cycle. You're not a large company. You don't have a line of credit to carry receivables on. You have payroll on Thursday.
What actually works instead
Deposit plus balance on completion. This is the best structure for most residential contracting work. You collect 25–50% before you start, the remainder when the job is done and the client has walked it. You're never in the hole — the deposit covers your early costs, and completion payment closes it out. Your receivables cycle is the length of the job, not 30 days added on top of it.
Net 15. If a deposit doesn't fit the situation, net 15 instead of net 30 cuts your float in half. For commercial clients or GC relationships where deposits aren't standard, this is a reasonable ask. Some clients will say no, but many won't — they just need someone to ask.
Due on receipt. For smaller jobs — a day or two of work — there's no reason this shouldn't be paid when the work is done. Present the invoice on site when you wrap up. Most clients will pay by card or transfer immediately. The ones who can't or won't often have a bigger cash problem that will surface later.
How to change your current terms
If you're already running jobs on net 30 with existing clients, you can't flip a switch overnight. But you can change your terms for new work. Update your estimate template, make it clear in the first conversation, and present it as your standard process — not a negotiation.
For existing long-term clients, you can say: "Starting with new jobs, we're moving to net 15 to keep our cash flow in order. Wanted to give you a heads up before the next project." Most good clients will understand. Clients who push back hard on reasonable payment terms are giving you information worth having.
Early payment discounts
Some contractors offer a small discount for paying early — 1–2% off for payment within 5 days. In accounting shorthand this looks like "2/10 net 30" — 2% discount if paid in 10 days, full amount due at 30. For clients who have the cash and want to save a little, this works. For most small residential work it adds complexity without enough benefit. But if you're doing volume commercial work, it's worth considering.
Late fees
Including a late fee in your terms — typically 1.5% per month on overdue balances — is a signal that you take payment timing seriously. Whether you actually enforce it varies, and in practice most contractors let small late fees slide. But having it in writing gives you something to reference in collection conversations and occasionally motivates clients who would otherwise sit on an invoice indefinitely.
The most important thing isn't the late fee — it's the payment term. Set a term that works for your business, put it in writing, and hold to it consistently. Cash flow problems in contracting are almost always a terms problem dressed up as a business problem.
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