Payment Terms in Freelance Contracts: Deposits, Milestones, Net 30 (2026)

The Cash Flow Problem That Net 30 Creates

Consider a simple scenario: you deliver a completed website on 1 March. Your invoice says Net 30. The client pays on 31 March. You spent February and March working on this project. You now have cash arriving in late March to cover costs you incurred in February — a month of lag that compounds with every project.

For a freelancer running three concurrent projects with Net 30 terms each, the lag becomes a permanent feature of the business. You are always waiting. And when one client pays late — which is not a hypothetical — the entire system strains.

EU law gives you legal tools to demand faster payment and to penalise late payment at rates well above any bank's overdraft rate. Most freelancers never use them. The ones who do get paid faster.

What EU Law Says About Payment Terms

EU Directive 2011/7/EU on combating late payment in commercial transactions establishes the legal floor for B2B payment. Key provisions:

• Maximum payment period: 60 days for B2B transactions (30 days for public authorities) — unless a longer period is agreed and it is not "grossly unfair" to the creditor
• Statutory interest: ECB reference rate + 8 percentage points, accruing from the day after the payment due date, automatically — no clause required
• Flat-fee recovery: €40 per invoice, payable automatically upon late payment, to cover collection costs
• Supplementary recovery: You can also claim reasonable recovery costs beyond the €40 if documented

The directive is implemented in all EU member states. In Germany it is reflected in §§286, 288 BGB; in France in Art. L441-6 Code de commerce; in the Netherlands in §6:119a BW.

What the directive does not do: It does not set a minimum payment term. It does not stop you from requiring payment due on receipt. It provides a ceiling and a penalty mechanism — your contract determines everything below the ceiling.

The Four Payment Structures for Freelance Work

1. Deposit + Final Payment (Small Projects)

Best for: Projects under €5,000, duration under 4 weeks.

Why it works: The deposit eliminates the zero-cost exploration problem (clients who commission work and then disappear before it costs them anything). The final payment is small enough that the client does not feel they are paying before they have received value, but large enough that you have not completed the work for free.

Invoicing: Issue the deposit invoice immediately upon signature with Net 0 (due on receipt) or Net 7. Issue the final invoice upon delivery with Net 7. Do not wait 30 days. There is no legal requirement to do so.

2. Three-Stage Milestone Payment (Medium Projects)

Best for: Projects of €5,000–€20,000, duration 4–12 weeks.

Milestone definition matters: The mid-point milestone must be defined precisely in the contract — not "when the project is halfway done" but "upon client written approval of the wireframes" or "upon delivery of the first draft manuscript." Vague milestones create disputes about whether the trigger has been met.

Approval by silence: Include a clause stating that if the client does not provide written feedback within 10 business days of milestone delivery, the milestone is deemed approved and the associated invoice falls due.

3. Monthly Retainer (Ongoing Work)

Best for: Continuous services — content creation, advisory, maintenance, ongoing development.

Invoice in advance, not in arrears. A retainer invoiced in arrears means you work all month and then wait for payment. A retainer invoiced at the start of the month means the client pays for the month they are about to receive. Frame it as subscription-style: you retain your availability and capacity; they pay to secure it.

Unused hours: If your retainer includes a set number of hours, specify whether unused hours roll over (they should not — rollover creates accounting complexity and client expectation mismatches) or lapse.

4. Due on Receipt (Short-Turnaround Work)

Best for: Quick-turnaround deliverables — copywriting, translation, small design tasks.

"Due on receipt" (or "Net 0") means payment is due the moment the invoice is issued. While this sounds aggressive, it is entirely legal and is appropriate for:

• Projects under €1,500
• Clients you have not worked with before
• Digital deliverables sent simultaneously with the invoice

Be aware that "due on receipt" may cause friction with clients who run formal procurement processes with 30-day payment cycles baked into their accounting systems. For those clients, Net 14 is usually the workable compromise.

How to Write a Payment Clause

A complete payment clause must contain all of the following:

Amount and currency: State the exact fee and the currency. "€8,500 (eight thousand five hundred euros)" — both numerals and words reduces dispute risk.

Payment structure: Specify each instalment, its amount, and its trigger event.

Due dates: State explicit dates or calculation methods ("within 14 calendar days of invoice date" is clearer than "Net 14" because it removes ambiguity about when the clock starts).

Payment method: "By SEPA bank transfer to the following IBAN: [IBAN]. Payment is deemed made when cleared funds arrive in the Freelancer's account." Include your BIC/SWIFT if you have international clients.

Late payment interest: "In the event of late payment, the Freelancer is entitled to statutory interest pursuant to EU Directive 2011/7/EU (implemented in [country] by [national provision]) at the rate of the ECB reference rate plus 8 percentage points per annum, accruing from the day after the due date without prior notice. The Client is additionally liable for a flat-fee recovery cost of €40 per overdue invoice."

IP link: "Intellectual property in the Deliverables transfers to the Client only upon receipt of full payment of all amounts due under this Agreement."

SEPA vs. PayPal vs. Wise: Which to Use

For EU-to-EU work, SEPA is almost always the right answer. It is free, legally clean, and creates an unambiguous record. The only argument for PayPal or Wise within the EU is client preference — which is rarely sufficient reason to accept a worse payment mechanism.

The European Payment Order: Enforcing Across Borders

If a client in another EU country does not pay, you have a powerful tool available without needing a lawyer in their country: the European Payment Order (EPO), established under Regulation (EC) No 1896/2006.

The process:

1. Complete Form A (available from the European e-Justice Portal) in your country's court system
2. The court issues the EPO within 30 days if the claim appears valid
3. The EPO is served on the debtor, who has 30 days to oppose it
4. If no opposition: the EPO becomes automatically enforceable in every EU member state (except Denmark)
5. If opposed: the case proceeds to ordinary civil proceedings

For claims up to €5,000, the European Small Claims Procedure (ESCP) under Regulation (EC) No 861/2007 is an alternative — it is written-form only, does not require court hearings, and is enforceable across the EU.

Neither procedure requires you to know the other country's legal system. Both are designed to be accessible to individuals without legal representation.

Currency Risk: EUR vs. Client's Local Currency

If your client is in a non-eurozone EU country (Poland, Czech Republic, Sweden, Hungary, etc.), you face a choice:

Invoice in EUR: You have certainty. The client bears the exchange rate risk. Some clients object.

Invoice in local currency: You bear the exchange rate risk. For a €10,000-equivalent project invoiced in PLN with a payment term of 30 days, a 3% currency movement costs you €300.

Recommendation: Invoice in EUR unless the client specifically cannot or will not pay in EUR, or unless the project fee is small enough that currency risk is immaterial. Your contract should specify: "All amounts are denominated and payable in euros (EUR). Any currency conversion costs are the Client's responsibility."

The Approval-by-Silence Clause

One of the most useful payment-adjacent clauses rarely included in freelance contracts is approval by silence:

"If the Client does not provide written feedback or raise an objection within 10 business days of delivery of any milestone or final deliverable, the deliverable shall be deemed approved by the Client and the associated invoice shall become immediately due and payable."

This clause prevents the "I haven't had a chance to review it yet" delay from becoming an indefinite one. The client has 10 business days. After that, you are paid, and the work is approved.

Get Paid on Time, Every Time

The difference between a freelancer who struggles with cash flow and one who does not is usually not the quality of their work — it is the payment terms in their contracts. The EU Freelance Contract Generator includes a complete payment clause covering deposit structure, milestone triggers, due dates, IBAN payment details, statutory late payment interest under Directive 2011/7/EU, and the approval-by-silence provision — customised for your country and project type.

Legal references: EU Directive 2011/7/EU on combating late payment in commercial transactions; §§286, 288 BGB (Germany — statutory interest and late payment); Art. L441-6 Code de commerce (France); §6:119a BW (Netherlands); Regulation (EC) No 1896/2006 (European Payment Order); Regulation (EC) No 861/2007 (European Small Claims Procedure).