Payment terms, explained in plain words
Payment terms tell your customer exactly when to pay and what happens if they do not. Clear terms, agreed before the work starts, are the cheapest way to get paid on time.
What payment terms are
Payment terms are the part of your agreement that says when money is due. They belong in three places: on your quote or contract, so the customer agrees to them up front; on every invoice, so nobody can say they did not know; and in your follow up, so reminders point back to what was agreed.
Good terms answer three questions. When is the money due? How can it be paid? What happens if it is late? If your invoice answers all three, most customers simply pay.
Common terms and what they mean
- Due on receipt: payable as soon as the customer receives the invoice. Common for small one-off jobs for households.
- Net 7, Net 14, Net 30: payable within 7, 14 or 30 days of the invoice date. Net 30 is a common term between businesses.
- End of month (EOM): payable by the end of the month in which the invoice is dated. A variation such as 20th of the following month gives the customer until that date.
- Payment in advance: the full amount before the work starts, used for bookings, small custom jobs and new customers you have not worked with before.
- Deposit and balance: part of the price up front to secure the booking or buy materials, and the balance on completion.
- Progress or stage payments: a payment at each agreed stage of a longer job, so you are never carrying weeks of unpaid work.
- 2/10 net 30: a 2% discount if the customer pays within 10 days, otherwise the full amount within 30 days.
How to choose your terms
Start with your cash flow, not with what others in your trade do. If you pay for materials or staff before the customer pays you, shorter terms and deposits protect you.
Then match the terms to the customer. Households usually pay on completion or within a few days, and there is rarely a reason to give them 30 days of credit. Businesses, agencies and property managers often work to set payment runs, so ask when their run is and pick terms that land your invoice just before it.
Finally, write the due date as a date on every invoice. Due 14 November 2026 needs no arithmetic, while Net 30 makes the customer count, and invites a debate about whether the 30 days started on the invoice date or the day they opened it.
An invoice with terms nobody can misread
A consultant billing a business customer. The terms give a firm date, the payment reference, and point back to the agreement the customer signed before the work began. In this example the service is not subject to sales tax.
Example only, with a fictional business and customer. Your invoices use your own details, tax settings and design.
| Description | Qty | Rate | Amount |
|---|---|---|---|
| Process review workshop, on site, per day | 2 | $1,200.00 | $2,400.00 |
| Written recommendations report | 1 | $900.00 | $900.00 |
Deposits and progress payments
A deposit does two jobs. It covers your costs if the customer cancels, and it shows the customer is committed before you order materials or turn other work away. Ask for it on the quote, invoice it as soon as the quote is accepted, and take it off the final invoice so the balance due is clear.
For longer jobs, agree the stages in writing at the quote, such as on start, at lock up and on completion, and invoice each stage the day it is reached. Our guide to getting paid faster covers how to make each of those invoices easy to pay.
Early payment discounts
A discount for paying early can bring cash in sooner, but it comes off your margin on every invoice it is used on. If you offer one, state the rate and the date it ends on the invoice. In the UK a full VAT invoice must show the rate of any cash discount offered, so the wording is not optional there.
Before offering a discount, make paying quick and easy; that costs you nothing and removes easy excuses for waiting.
Late fees and interest
Charge late fees or interest only if they were part of the terms the customer agreed to before the work. A fee that appears for the first time on an overdue invoice may not be enforceable, and it can sour the relationship. Rules for consumers are often stricter than for businesses, so check what applies where you work.
Some countries give businesses a right to interest even when nothing was agreed. In the UK, for example, a business customer that pays late can be charged statutory interest of 8% plus the Bank of England base rate, unless your contract sets another rate, plus a fixed recovery sum of £40, £70 or £100 depending on the size of the debt. If you agreed no payment date, the payment counts as late 30 days after the customer received the invoice or the service, whichever is later.
Setting your terms in WhizInvoice
In Settings, Numbers and terms, set your usual payment terms in days and how long quotes stay valid. Each new invoice then gets a real due date automatically, and you can change it on any single invoice. Your written terms and conditions can go on quotes and invoices too.
On Starter and above, quotes can carry a deposit that your customer sees before accepting online, and the final invoice takes off whatever deposit has been paid. Reminders, on every plan, follow the due date you set and stop as soon as the invoice is paid.
Good to know
What does net 30 mean?
That the full amount is due within 30 days of the invoice date. Writing the actual date on the invoice, such as Due 30 November 2026, avoids any doubt about when the 30 days end.
What payment terms should I give households?
Short ones. Payment on completion or within 7 days suits most household jobs, with a deposit for bigger work or when you buy materials in advance.
Can I charge a late fee?
Generally only if the fee was in the terms your customer agreed to before you did the work. Some countries, such as the UK, also give businesses a statutory right to interest on late business debts.
What if I never agreed payment terms with a business customer in the UK?
The law treats the payment as late 30 days after the customer received your invoice or the service, whichever is later, and statutory interest can then apply.
Should payment terms go on the quote or the invoice?
Both. The quote is where the customer agrees to them, and the invoice reminds them of what was agreed.
Put clear terms on every invoice
Set your terms once and every invoice carries a real due date, with reminders that follow it, on the Free plan.
Free plan forever. No card needed to start.