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//// Freelance · Cash Flow

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.

SE Tax Rate15.3%(vs 7.65% W-2)

QBI Deduction20%(Section 199A)

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

Monthly invoiced revenue

Average amount you invoice per month

Payment terms you offer

The terms on your invoices

Average late payment days

How many extra days beyond your stated terms clients typically take

days

Opportunity rate

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

Terms Comparison

Terms	Total Days	AR Outstanding	Annual Cost
Net 0 (immediate)	10 days	$2,667	$213
Net 15	25 days	$6,667	$533
Net 30← you	40 days	$10,667	$853
Net 60	70 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.

Average payment terms

= Net 30

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

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.

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.

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.

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.

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.

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.

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.

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