What is Payment Terms?
Payment terms are the conditions under which a seller expects to be paid by a buyer, including the payment deadline, accepted methods, late payment penalties, and any deposit requirements.
Payment terms define when and how you expect to be paid for your work. They should be stated clearly on every invoice, quote, and contract you issue.
Common payment terms for freelancers:
- Net 30: Full payment within 30 days of the invoice date
- Net 14 / Net 7: Shorter payment windows for better cash flow
- Due on receipt: Payment expected immediately upon receiving the invoice
- 50% upfront, 50% on completion: Common for larger projects
- Milestone payments: Payments tied to specific project deliverables
- Retainer: Fixed monthly payment for ongoing services
What to include in your payment terms:
- Payment deadline: Be specific — "Net 30" or "Due by 15 March 2026"
- Accepted payment methods: Bank transfer, card, PayPal, etc.
- Currency: GBP (£) for UK clients; specify for international work
- Late payment policy: Reference the Late Payment of Commercial Debts Act
- Deposit requirements: State any upfront payment needed before work begins
Tips for setting effective payment terms:
- Shorter terms improve cash flow — do not default to Net 30 if Net 14 works
- Always require a deposit for new clients or large projects
- State consequences of late payment (interest charges, work suspension)
- Be consistent — use the same terms across all clients where possible
In the UK, you have statutory rights to charge interest on late commercial payments even without a specific contract clause. OwnedWork lets you set default payment terms that apply to all new invoices automatically.
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Frequently Asked Questions
What are the best payment terms for freelancers?
Net 14 with a 25-50% upfront deposit is ideal for most freelancers. It balances professionalism with cash flow protection. For retainer work, monthly payment at the start of each month is common. Adjust based on client relationship and project size.
Should I offer early payment discounts?
Early payment discounts (e.g., 2% off if paid within 10 days) can incentivise faster payment, but they reduce your income. They work best for larger invoices where the discount is worth it for both parties. For most freelancers, firm payment terms and consistent follow-up are more effective.
Can I charge different payment terms to different clients?
Yes. You can tailor payment terms to each client based on the project size, your relationship, and the client's payment history. Trusted long-term clients might get Net 30, while new clients start with Net 14 or payment upfront.
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