Invoice payment terms template: what to include so clients have no excuse
Most late payments are decided before the invoice goes out. This is the wording to agree up front, and what each line is quietly doing for you.
The short answer
Good payment terms remove excuses. They answer, in writing and before any work starts: when payment is due, who receives the invoice, what happens if it’s late, how the work will be billed, and how to pay.
The wording below is a starting point to adapt, not a substitute for legal advice on a contract that matters.
The core clause
Payment terms Invoices are payable within 14 days of the invoice date (net 14). Invoices will be sent to [AP contact name] at [ap@client.com], quoting purchase order reference [PO number] where one has been issued. Please tell us in advance of any reference required by your finance team; invoices returned for a missing reference remain due on the original date. Payment is made by bank transfer to the account shown on the invoice. Accounts unpaid after the due date may be subject to interest and a fixed compensation charge in accordance with the Late Payment of Commercial Debts (Interest) Act 1998. Where work is delivered in stages, each stage is invoiced on completion and payable on the same terms.
UK-specific in the interest line. If you invoice outside the UK, replace that sentence with your own late-payment position or the equivalent local statute.
What each line is doing
- “Within 14 days of the invoice date” — a rule, not a date, and explicit about what the clock runs from. “30 days” on its own is ambiguous enough for a large client’s payment run to interpret generously.
- The named AP contact — the most under-rated line here. Invoices sent to your day-to-day contact frequently sit in a personal inbox for weeks. Naming the recipient up front also removes “it never reached us” as an answer.
- The PO clause — large organisations will bounce an invoice with no PO and often won’t tell you. Making the reference their responsibility to provide, and stating that the due date survives a bounce, closes a common three-week hole.
- The interest sentence — you may never invoke it. Its job is to establish that the date is real, and it costs nothing to include.
- The staged-billing line — prevents the argument that nothing is payable until the whole project is finished.
Optional clauses worth considering
A deposit of 40% of the project fee is payable before work begins. The remaining balance is invoiced on completion, or by milestone where the project schedule sets them out.
Retainer fees are invoiced monthly in advance, on the first working day of the month, and are payable within 14 days.
Where an invoice remains unpaid more than 30 days after its due date, we may pause further work on your account until the balance is settled. We will always give notice in writing before doing so.
The pause clause is the one with real teeth, and the one to use most carefully. It works because it is the only consequence most clients genuinely feel — and it damages relationships if you deploy it without warning, which is why the notice sentence belongs in the wording rather than in your good intentions.
Where terms usually fail
Not in the drafting. In three predictable places afterwards:
- They live in the contract and nowhere else. The due-date rule should also appear on every invoice, in plain language.
- They’re never enforced. Terms you visibly ignore for six months are terms your client has reasonably concluded are decorative.
- Nobody follows up on the date. The strongest terms in the world do nothing if the invoice quietly ages while everyone is busy. That is a process problem, not a drafting one — see chasing without ruining the relationship.
Frequently asked questions
What should invoice payment terms include?+
Five things: when payment is due stated as a rule rather than a date ("net 14 from invoice date"), who receives the invoice and any PO or reference their finance team needs, what happens if payment is late, the billing rhythm (deposit, milestones or monthly), and how to pay. Anything missing from that list becomes a reason to delay later.
What does net 30 mean?+
Net 30 means the full amount is due 30 days from the invoice date, unless you state otherwise. Be explicit about what the clock runs from — invoice date, delivery date or receipt — because "30 days" alone is genuinely ambiguous and large clients will interpret it in whichever way suits their payment run.
Should I charge late payment interest?+
Stating a late payment position is usually worth more as a signal than as revenue. In the UK, the Late Payment of Commercial Debts (Interest) Act 1998 gives you a statutory right to interest on overdue B2B invoices at 8% above the Bank of England base rate plus a fixed compensation charge, whether or not your contract mentions it. Referencing it up front makes clear that dates are real. General guidance, not legal advice.
How do I set payment terms with a new client?+
Put them in the proposal or statement of work rather than introducing them on the first invoice. Terms presented before anyone has done any work read as normal commercial practice; the same terms appearing after delivery read as a new demand and invite negotiation you did not plan for.
Can I change payment terms for an existing client?+
You can, but treat it as a commercial conversation rather than an administrative update. Give notice, tie it to something concrete such as a new project or an annual review, and expect to hold the line once. Quietly changing the terms printed on your invoices is not an agreement and will not help you if the debt is ever disputed.
Should payment terms mention a grace period?+
Put it in the terms if you intend to rely on it, and do not repeat it on every invoice. Stated once in a contract it reads as reasonable. Printed on the invoice next to the due date it simply becomes the deadline, and clients pay to the last date you told them was acceptable.
Related reading: what is a grace period · how to reduce DSO · debt collection before a solicitor.