Glossary · Payment terms
Payment terms
Payment terms are the agreed conditions for paying an invoice: when it is due, how to pay, and what happens if payment is late.
Payment terms set out when an invoice must be paid (net 30, due on receipt, 30 days end of month), how (bank transfer, direct debit, card), and the consequences of paying late: interest, a late fee, or work stopping. They belong in the contract or the terms of business the customer accepted, and should be repeated on every invoice.
Terms only carry weight if the customer agreed to them before the work. Terms printed for the first time on an invoice are a request, not a contract. In the EU, B2B payment terms longer than 60 days are allowed only if expressly agreed and not grossly unfair to the supplier, under the Late Payment Directive.
Shorter terms are not automatically better. Terms the customer’s accounts-payable cycle can’t meet produce late payments by design; terms that fit their payment run, stated clearly with a real due date, tend to be paid on time.
Example
A consultancy’s contract says: “Invoices are payable within 30 days of the invoice date by bank transfer. Overdue amounts carry interest at the statutory rate.” Each invoice repeats the due date and the bank details.