Glossary · Payment terms
Grace period
A grace period is a short window after the due date during which a payment is accepted without a late fee or other penalty.
A grace period gives customers a few extra days — commonly between 5 and 15 — after the due date before late fees apply or collection steps begin. It absorbs bank delays and payment runs that fall just after the due date.
Grace periods are a contractual choice, not a legal requirement for B2B invoices. Statutory late-payment interest in the EU and UK runs from the day after the due date, grace period or not, unless the contract says otherwise.
If you offer one, write it into the terms rather than applying it informally. An unwritten grace period becomes the customer’s real due date, and they will plan around it.
Example
A contract says invoices are due on day 30 with a 5-day grace period. A payment on day 34 carries no fee; one on day 36 carries the agreed late charge from day 31.