Payment terms on an invoice: net 30, net 14 and how to choose
The payment terms line is the one line on an invoice that decides when you get paid. A window cleaner can ask for payment on the doorstep. A landscaper buying turf needs a deposit. A designer invoicing a company may be asked for 30 days. Same line, 3 different answers. Write it on purpose.
This guide explains what payment terms are, what net 30 and the other common terms mean, how to choose yours, and what the rules say if a business pays late.
What payment terms are
Payment terms are the agreed conditions for paying an invoice: when payment is due, how much is due when, and any discount that applies for paying early. They sit on your invoice, and ideally on your quote too, so the customer has seen them before the work starts. GOV.UK confirms that you can set your own payment terms, such as discounts for early payment and payment upfront.
Common payment terms, and what they mean
Here are 5 terms to choose from, and the kind of job each one suits.
| Term | What it means | Often used for |
|---|---|---|
| Due on receipt | Payment is due as soon as the customer gets the invoice | Small jobs and one-off customers |
| Net 7 or net 14 | The full amount is due 7 or 14 days after the invoice date | Regular small jobs |
| Net 30 | The full amount is due 30 days after the invoice date | Business customers who pay on a schedule |
| Deposit upfront | Part of the price is due before work starts, for example 50% upfront and 50% on completion | Jobs where you buy materials first |
| Early payment discount | The customer pays less if they pay within a set time, for example 2% off within 10 days | Encouraging faster payment |
In "net 30", "net" means the full amount, with no early payment discount taken off. It has nothing to do with VAT. Net 30 simply says: the whole invoice, within 30 days.
What happens if you set no payment terms
Leaving the line blank can still leave you with a deadline. If you sell to another business and do not agree a payment date, GOV.UK says the payment is late 30 days after the customer gets your invoice, or after you deliver the goods or provide the service if that is later. If you want to be paid sooner, or later, put it in writing.
How to choose your payment terms
4 checks narrow the choice.
- • Look at the job. Short jobs for individuals suit due on receipt or 7 days. Longer jobs suit stage payments
- • Look at the customer. A business may ask for 30 days or more. GOV.UK says an agreed payment date for business transactions must usually be within 60 days, and anything longer must be fair to both businesses
- • Look at your own cash. If you pay for materials before you are paid, ask for a deposit
- • Agree before you start. Put the terms on your quote, so the invoice holds no surprises
Wording you can copy
Copy the line that matches your situation, then change the numbers.
| Situation | Wording |
|---|---|
| Short job | Payment due on receipt. |
| Regular small jobs | Payment due within 14 days of the invoice date. |
| Business customer | Payment due within 30 days of the invoice date. |
| Deposit | A 50% deposit is due before work starts. The balance is due on completion. |
| Early payment discount | 2% discount if paid within 10 days. Otherwise payment is due within 30 days. |
| Late payment | Interest may be charged on overdue invoices. |
If you are VAT registered and offer an early payment discount, the discount terms must be on the invoice, and how you handle the discount affects the VAT. If you do not issue a credit note, HMRC recommends specific wording on the invoice. Check VAT Notice 700, section 18.2.2, before you offer one.
Put the wording next to your total and bank details. If you need a layout to put it in, use the invoice template or look at a filled-in invoice example.
If a business pays you late
When another business is late paying for goods or a service, you can claim interest and debt recovery costs. GOV.UK sets the statutory interest for business to business transactions at 8% plus the Bank of England base rate. The base rate to use is the one in force on 30 June or 31 December immediately before the interest starts to run, not today’s rate. You can check past rates on the Bank of England website. If your contract has its own remedy for late payment, check it first. A substantial contractual remedy replaces statutory interest.
You can also charge a fixed sum for the cost of recovering the debt, set by late payment legislation:
| Amount of debt | What you can charge |
|---|---|
| Up to £999.99 | £40 |
| £1,000 to £9,999.99 | £70 |
| £10,000 or more | £100 |
You have the right to charge interest, and you can choose not to. For the wider picture on chasing money, see things to know about accounts receivable and debt collection.
Know who owes you, at a glance.
See which invoices are paid, unpaid or overdue in EasyInvoice, and send a customer a statement of what is still owed. Free trial for 14 days, no card needed.
Keep track of who owes you
Good terms only help if you can see who has not met them. In EasyInvoice you can:
- • See which invoices are paid, unpaid or overdue
- • Send a customer statement as a PDF, showing what is still owed
- • Open the customers aged debt report to see who owes you and how long for
Reports and statements are not in the Android app, but you can use them in the iOS app and in your browser. You can read more about client statements and the sales dashboard. Invoices and estimates have no limit, and Basic costs £6.99 a month.
FAQ
What does net 30 mean on an invoice?
Net 30 means the full invoice amount is due within 30 days of the invoice date. "Net" refers to the full amount with no early payment discount taken off.
How long does a customer have to pay an invoice in the UK?
It depends on what you agreed. If you sell to another business and do not agree a payment date, GOV.UK says the payment is late 30 days after the customer gets your invoice, or after you deliver the goods or provide the service, if that is later.
Can I ask for payment upfront?
Yes. GOV.UK says you can set your own payment terms, such as discounts for early payment and payment upfront. Put it on your quote and your invoice so the customer has agreed before work starts.
Can I charge interest on a late invoice?
When another business pays late, you can charge statutory interest of 8% plus the Bank of England base rate, unless your contract gives you a substantial remedy for late payment instead. GOV.UK has the details. You can also choose not to charge it.
What should invoice terms and conditions say?
Keep them short: when payment is due, how to pay, and what happens if payment is late. Add a deposit or a cancellation term if the job needs one. Longer terms belong on your quote, with a short version on the invoice.
