Glossary

What is Payment terms?

The agreed rules for when and how an invoice must be paid.

Payment terms set the due date, accepted payment methods and what happens if payment is late (interest, fees or suspension of work). They should be agreed before work starts — in a contract, quote or terms and conditions — and repeated on the invoice.

In UK business-to-business contracts, terms longer than 60 days must be expressly agreed and not grossly unfair to the supplier. Public sector bodies must pay within 30 days. If no terms are agreed, the law treats payment as due 30 days after the customer receives the invoice or the goods/services.

Example

"Payment is due within 14 days of the invoice date by bank transfer. Late payments incur statutory interest."

Free tools

Late Payment Clause GeneratorPayment terms and a late payment clause for contracts and T&Cs.Invoice Due Date CalculatorNet 7/14/30/60, EOM and custom terms — the exact due date.

Related terms

Net 30Payment terms meaning the invoice must be paid within 30 days of the invoice date.Statutory interestInterest that UK law lets a business charge on late B2B payments: 8% plus the Bank of England base rate.Late Payment Act 1998The UK law giving businesses the right to statutory interest and compensation on late B2B payments.

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