Invoice Payment Terms

What are payment terms?

Payment terms are the conditions under which a client is expected to pay your invoice. They set the due date, the accepted payment methods, and any consequences for paying late. Every invoice you send should include them.

Under the Late Payment of Commercial Debts (Interest) Act 1998, the default payment period for business-to-business transactions in the UK is 30 days from the date of invoice or the date goods or services are delivered, whichever is later. You can agree to a different term in writing, but some larger companies try to impose terms of 60 or 90 days, which the Act places limits on.

As a freelancer, you are free to set whatever terms you like. Most sole traders use 14 or 30 days. The key is to state them explicitly on every invoice rather than relying on the client to know the default.

Common term lengths explained

• Due on receipt: payment is expected immediately when the invoice is received. Rarely practical for larger clients but reasonable for small, one-off jobs with existing relationships.
• Net 7: payment due within 7 days. Works well for short projects or clients who pay quickly. Requires you to chase promptly if payment is missed.
• Net 14: a good middle ground for freelancers. Tight enough to protect your cash flow, reasonable enough that most clients will not push back.
• Net 30: the most widely used term in UK business. 30 days is also the statutory default, so it aligns with what larger clients expect from their accounts payable processes.
• Net 60 / Net 90: common in large corporates and some industries. These are tough on freelance cash flow. You can negotiate shorter terms, or account for the delay when setting your day rate.
• EOM (end of month): payment due by the last day of the month in which the invoice was issued. Practical for clients who run monthly payment runs.

When a client proposes terms you are not happy with, it is normal to negotiate. Most larger businesses have standard terms but also have discretion to accommodate smaller suppliers on shorter cycles if you ask directly.

What to write on your invoice

Vague payment terms create disputes. Instead of writing “payment due within 30 days,” state the exact due date. This removes any ambiguity about when the clock starts.

A clear payment terms section on your invoice should include:

• Due date: for example, “Payment due by 5 October 2026”
• Accepted payment methods: BACS bank transfer is standard in the UK. Include your sort code and account number so the client has no reason to ask for them separately.
• Late payment notice: a brief note that statutory interest will apply to overdue invoices. Even if you never enforce it, this signals that you know your rights.
• Reference or PO number: many clients require a purchase order number to process payment. Ask for this before you raise the invoice, not after.

For a full breakdown of everything HMRC requires on a UK invoice, see the How to Invoice in the UK guide.

Deposits and milestone payments

One of the most effective ways to protect your cash flow is to invoice for a deposit before work begins. A 25 to 50 percent upfront payment is common practice in creative and professional services, and it has two benefits:

• You receive money before you spend time on the work, which reduces the risk of a non-paying client
• It filters out clients who are not serious about going ahead

For longer projects, milestone invoicing (billing at defined stages of delivery rather than at the end) keeps your cash flow healthier throughout the work and reduces the total amount at risk if a client relationship breaks down.

Always reference your deposit or milestone invoice terms in your initial quote or contract so there are no surprises when the invoice arrives.

Charging interest on late payment

If a client pays after the agreed due date, you have a legal right to charge statutory interest under the Late Payment of Commercial Debts Act. The rate is 8% per year above the Bank of England base rate. At the time of writing, with the base rate at around 4.5%, statutory interest runs at approximately 12.5% annually.

You are also entitled to fixed compensation for the cost of recovering a late payment:

• £40 for debts under £1,000
• £70 for debts between £1,000 and £9,999
• £100 for debts of £10,000 or more

In practice, most freelancers do not charge interest to clients they want to keep. But knowing you have the right to do so gives you a stronger position when chasing a stubborn late payer. A polite mention that interest is accruing is often enough to prompt payment.

For a full guide to using these rights, see Late Payment Legislation UK. For email templates to chase overdue invoices, see Chasing Late Invoices.

How to get paid faster

Setting shorter terms is one lever, but there are several others:

• Send invoices promptly: the clock on your payment terms does not start until the invoice is received. Sitting on an invoice for a week before sending it delays your payment by the same amount.
• Include all bank details on the invoice: if a client has to email you to ask for your sort code, they have an excuse to delay. Put your bank name, sort code, and account number on every invoice.
• Use a specific due date, not a term: “due 5 October” is harder to ignore than “due in 30 days.”
• Send a reminder before the due date: a brief, friendly email two or three days before the due date catches invoices that have slipped through the cracks without creating friction.
• Have a consistent chasing process: if a payment is late, follow up on day one, day seven, and day fourteen before escalating. Consistency signals that you take payment seriously.
• Consider a small prompt payment discount: some freelancers offer 1 to 2 percent off for payment within 7 days. Not always worth it financially, but it can shift the dynamic with slow-paying clients.