Payment terms are one of the most important — and most overlooked — parts of running a freelance or small business. The terms you set directly affect when money arrives in your account, how much admin you spend chasing payments, and how much financial risk you carry between completing work and getting paid for it.

This guide explains what payment terms are, what the common options mean, how to choose the right terms for your business, and how to get clients to actually respect them.

What are payment terms?

Payment terms are the conditions under which you expect to be paid. They specify when payment is due, what payment methods you accept, and any consequences for late payment. They appear on your invoices and ideally in your contracts too.

The most fundamental element of payment terms is the deadline — how many days after the invoice date does the client have to pay? But terms can also cover deposits, stage payments, early payment discounts, and late payment penalties.

Common payment term options explained

Term	What it means	When to use it
Due on receipt	Payment expected immediately on receiving the invoice	Small one-off jobs, new clients, high-risk situations
Net 7	Payment due within 7 days of invoice date	Short project turnarounds, trusted regular clients
Net 14	Payment due within 14 days of invoice date	Recommended default for most sole traders and freelancers
Net 30	Payment due within 30 days of invoice date	Standard for larger businesses; required by some procurement policies
Net 60	Payment due within 60 days of invoice date	Avoid unless the client insists — damaging to cash flow
EOM	Payment due at the end of the month in which the invoice was issued	Some larger clients run monthly payment runs — this fits their process
50% upfront	Half paid before work begins, half on completion	Larger projects, new clients, any project with significant time investment
Stage payments	Payment at agreed milestones throughout the project	Long projects spanning weeks or months

What does UK law say about payment terms?

If you don't state payment terms on your invoice, UK law defaults to 30 days from the invoice date or delivery of goods/services, whichever is later. This is set out in the Late Payment of Commercial Debts (Interest) Act 1998.

For business-to-business transactions, both parties can agree to different terms in writing. However, terms of more than 60 days can only be enforced if they're not "grossly unfair" to the supplier — a protection designed to stop large businesses imposing unreasonable terms on small suppliers.

For business-to-consumer transactions (selling to private individuals rather than businesses), the Consumer Contracts Regulations also apply, so it's worth taking advice if a significant portion of your work is B2C.

Which payment terms should you use?

The right terms depend on your business, your clients, and your cash flow situation. Here's a practical guide:

If you're just starting out

Use Net 14 as your default. It's short enough to maintain cash flow, professional enough that clients take it seriously, and gives most clients enough time to process the payment without rushing. Avoid Net 30 until you have enough cash reserves to absorb a month's delay.

If you do larger projects

Always use a deposit — typically 25–50% upfront before work begins. This protects you against the risk of the client walking away partway through a project, and it immediately improves your cash flow on bigger jobs. Stage payments at agreed milestones work well for projects spanning several weeks or months.

If you have a new client

Consider shorter terms — Net 7 or Net 14 — until you've established that they pay reliably. Once they've paid two or three invoices on time, you can relax to whatever terms work for both of you.

If a client insists on Net 30 or longer

This is common with larger businesses. If you must accept longer terms, factor the delay into your pricing — your day rate should account for the cash flow impact of waiting 30 or 60 days. You can also ask for a deposit to offset the risk, even if the final payment is on longer terms.

Should you offer early payment discounts?

Some businesses offer a small discount — typically 1–2% — for payment within a shorter window. For example: "2% discount if paid within 7 days, otherwise Net 30." This is common in product-based businesses but less so in services. Whether it makes sense depends on your margins and how much you value the faster cash flow. For most freelancers, simply shortening your default terms is more effective than discounting.

Can you charge interest on late payments?

Yes. Under the Late Payment of Commercial Debts Act, you're automatically entitled to charge statutory interest of 8% above the Bank of England base rate on overdue B2B invoices, plus a fixed debt recovery fee of £40–£100 depending on the invoice value. You don't have to state this on your invoice for the right to apply — it's automatic — but many freelancers include a note such as:

"Late payments may be subject to statutory interest under the Late Payment of Commercial Debts Act 1998."

This acts as a gentle reminder without being aggressive, and it signals that you know your legal rights.

How to get clients to respect your payment terms

Setting terms is one thing — getting clients to stick to them is another. These practices make a real difference:

State your terms in writing before work begins — include them in your proposal or contract, not just on the invoice. A client who agrees to terms upfront is much more likely to honour them
Include the due date as a specific date on the invoice — "Payment due 14 February 2026" is clearer than "Net 14" and leaves no room for misinterpretation
Invoice immediately — the sooner you invoice after completing work, the sooner the clock starts. Waiting until the end of the week costs you days of payment time every single invoice
Send a reminder before the due date — a brief, friendly email a few days before the due date catches invoices that have been missed or buried in inboxes
Chase promptly when overdue — don't wait two weeks before following up. A polite chase on the day it's due is professional, not pushy
Be consistent — if you let clients pay late without comment, they learn that your terms are flexible. Consistent, professional chasing trains clients to pay on time

Payment terms on your invoice — what to write

Keep it clear and simple. Good examples:

"Payment due within 14 days of invoice date."
"Payment due by 14 February 2026."
"50% deposit paid. Balance of £[amount] due within 14 days of completion."
"Payment due within 30 days. Late payments subject to statutory interest."

Avoid vague language like "payment at your earliest convenience" — it signals that you're not serious about being paid on time.

Set your terms once, apply them automatically

Invoice Kwik lets you set your default payment terms once — whether that's Net 14, Net 30, or a specific number of days — and they're applied automatically to every invoice you create. The due date appears clearly on every invoice without you having to calculate or type it each time.

Try Invoice Kwik free — no credit card required.

What Are Payment Terms and Which Should You Use?