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Net 30 vs Immediate Payment

Enter your monthly revenue and payment terms to see the annual cost of waiting — outstanding AR, opportunity cost, cash flow gap, and how much you save by switching to Net 15 or requiring payment upfront.

Where this fits

📦 Business & Seller OpsGoing 1099FreelancersFounders

This tool lives inside Going 1099 and is most useful for freelancers and founders.

SE Tax Rate15.3%
QBI Deduction20%
Quarterly DeadlinesApr · Jun · Sep · Jan

Annual cost of your payment terms

$853

$10,667 always outstanding · 40 avg days to payment

Switching to Net 15 saves

$320/yr

Net 0 saves $640/yr

Switching to Net 15 saves $107/year. Requiring a 50% deposit at project start is even better.

Your Numbers

Average amount you invoice per month

$

The terms on your invoices

How many extra days beyond your stated terms clients typically take

days

Annual return you could earn on this money (HYSA ~5%, invested ~8%)

%

Terms Comparison

TermsTotal DaysAR OutstandingAnnual Cost
Net 0 (immediate)10 days$2,667$213
Net 1525 days$6,667$533
Net 30← you40 days$10,667$853
Net 6070 days$18,667$1,493

AR always in-flight

$10,667

Cash gap

1.3 mo

Hourly drag

$0.43/hr

Monthly cost

$71

How to improve your cash flow

50% deposit upfront: Require half at project start and half on delivery. Cuts your average outstanding AR roughly in half without requiring clients to pay all at once.

Early-pay discount: Offer a 1-2% discount for payment within 10 days ("2/10 Net 30"). At $8,000/month, 2% = $160/month — a small cost vs $71 in opportunity cost.

Late payment fees: Add 1.5%/month interest on overdue invoices to your contracts. Most clients won't trigger it, but it creates urgency and protects you.

Invoice immediately: Send invoices the day work is delivered or milestones are hit. Every day of delay is a free extension you gave the client.

1

Average payment terms

= Net 30

The number of days from invoice to when you typically receive payment.

2

Total days to payment (including late)

payment terms days + average late days

30 + 10

= 40 days

On average, invoices are paid ${inputs.lateDays} days beyond stated terms.

3

Outstanding AR at any given time

monthly revenue × (total days / 30)

$8,000 × (40 / 30)

= $10,667

This is the average amount of money you have invoiced but not yet received at any point in time.

4

Annual opportunity cost

outstanding AR × opportunity rate

$10,667 × 8%

= $853

If you had this money earning 8% (e.g., high-yield savings, invested), this is what you would earn annually.

5

Cash flow gap

= 1.3 months of revenue in-flight at all times

At any moment, this many months of your revenue is out the door but not yet in your bank account.

6

Hourly equivalent cost of waiting

annual opportunity cost / 2,000 working hours

$853 / 2,000

= $0.43/hr

Framed as an hourly cost — this is how much your payment terms are effectively costing you per working hour.

7

Annual savings from switching to Net 15

current terms cost − Net 15 cost

$853 − $533

= $320

What you would save annually by tightening your payment terms to Net 15.

8

Annual savings from switching to immediate payment

current terms cost − Net 0 cost

$853 − $213

= $640

What you would save annually by requiring payment on delivery or upfront deposit.

Key insight

At $8,000/month on Net 30 terms with 10 late days, you have $10,667 outstanding at all times — costing $853/year in opportunity cost.

#ShowYourWork

Opportunity cost uses a simple annual rate applied to average outstanding AR. Actual impact varies by client payment behavior and investment returns.

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