Net-30 is the default that most clients expect — but it is rarely the best option for freelancers. Net-15 or 50% upfront protect your cash flow without losing clients. Here is how to set payment terms that actually get you paid on time.
Common Payment Terms and What They Mean
| Term | Meaning | Best for |
|---|---|---|
| Due on Receipt | Payment expected immediately upon invoice delivery | Small projects, trusted clients |
| Net 7 | Payment due within 7 days | Recurring clients, low-risk projects |
| Net 14 | Payment due within 14 days | Good default for most freelancers |
| Net 30 | Payment due within 30 days | Corporate clients with AP departments |
| Net 60 | Payment due within 60 days | Large corporate clients (often unavoidable) |
Recommendation for most Canadian freelancers: Start with Net 14 as your default. It is short enough to maintain cash flow and professional enough to be accepted by most clients. Reserve Net 30 for established corporate clients who require it as a condition of doing business.
Deposits: The Most Important Protection You Can Use
A deposit (also called a retainer or advance payment) is the single most effective way to protect yourself from non-payment and reduce the risk of clients who disappear mid-project. Standard deposit practices in Canada:
- 25–50% upfront for projects over $500. 50% is standard for new clients or large projects.
- 100% upfront for low-cost, high-risk work (e.g., custom writing, small design jobs, translation)
- Milestone payments for large, multi-phase projects: 30% to start, 30% at mid-point, 40% on final delivery
Never begin substantive work on a project until you have received the agreed deposit. Clients who resist a reasonable deposit request are disproportionately likely to cause payment problems later.
Late Payment Fees
Including a late payment fee in your payment terms is both legal and professionally normal in Canada. A typical late fee structure:
- 1.5% per month (18% annually) on outstanding balances — this is a common standard rate
- Or a flat fee (e.g., $25 or $50) per overdue invoice
Your late fee must be stated clearly on your invoice or in your contract before it applies. You cannot add a late fee after the fact unless the client agreed to it in advance.
In practice, many freelancers do not enforce late fees strictly. The fee is more useful as a psychological incentive for the client to pay on time than as revenue you will actually collect. However, having it in writing gives you leverage if you need to escalate.
What to Include on Your Invoice
A complete Canadian freelance invoice should include:
- Your name (or business name) and address
- Client’s name and address
- Invoice number (unique, sequential)
- Invoice date and due date
- Description of services rendered
- Amount in CAD (or USD if applicable) — specify currency
- GST/HST if you are registered: the rate, the amount, and your registration number
- Payment method instructions (Interac e-Transfer email, Wise account details, etc.)
- Late payment terms if applicable
Getting Paid Faster: Practical Tips
- Invoice immediately — send your invoice the day work is delivered, not at the end of the month. Delay in sending equals delay in payment.
- Make payment easy — include Interac e-Transfer details for Canadian clients. For larger amounts, provide your bank account details for EFT.
- Follow up on day 1 of overdue — a brief, polite email on the day after the due date is more effective than waiting a week.
- Automate reminders — FreshBooks and QuickBooks both send automatic payment reminders before and after the due date. This removes the awkwardness of chasing payments manually.
Payment Terms in Your Contract
Your payment terms should appear in your written contract, not just on the invoice. The contract should specify:
- Deposit amount and when it is due before work begins
- Invoice schedule (on delivery, on milestones, monthly)
- Payment due date (Net 14, Net 30)
- Accepted payment methods
- Late payment fee and when it begins to accrue
- What happens to outstanding work if payment is not received (e.g., work pauses, ownership of deliverables reverts to you)
Frequently Asked Questions
Can I charge interest on overdue invoices in Canada?
Yes, provided you specified the interest or late fee in writing before the work began. Without pre-agreed terms, you cannot retroactively impose interest. If a client signed a contract or agreed to your invoice terms (which included the late fee language), you can charge it. Enforcing it in small claims court is possible for amounts up to $35,000 in most provinces.
Should I use Net 30 for corporate clients?
Corporate clients often have accounts payable processes that require 30 days regardless of what you prefer. If a client insists on Net 30, accept it — but require a deposit to start and invoice promptly upon delivery. You can also include a 2% early payment discount if they pay within 10 days (called “2/10 Net 30”), which some companies will take advantage of.
What if a client has already missed the payment deadline?
Send a polite reminder immediately — email is standard. If no response within 5 business days, follow up by phone. If still unpaid after 30 days beyond the due date, send a formal demand letter and notify them that late fees are accruing. For amounts under $35,000, small claims court in your province is an affordable and effective next step if all else fails.