Payment Terms on Invoices: Templates, Deadlines and Tips

"Payment due within 14 days" – but when does the deadline start? And what happens if the client doesn't pay? The payment terms on your invoice are more than a formality. They determine when you get your money and what rights you have.

In this guide, you'll learn everything about payment terms: templates, legal basics, and tricks for faster payment.

What Are Payment Terms?

Payment terms specify when an invoice must be paid. They can be stated as:

• Period: "Payment due within 14 days"
• Date: "Payment due by February 15, 2025"
• Immediate: "Payment due immediately upon receipt"

After the payment deadline passes, the client is in default – and you can charge late payment interest.

Common Payment Terms

Industry/Situation	Typical Payment Terms
Freelancer to business	14-30 days
Agency to business	30 days
Corporation to suppliers	45-60 days (unfortunately)
Contractor to individual	7-14 days
Online shop	Immediate upon order
After project completion	14 days

As a freelancer:

• Short payment terms (14 days) are industry standard and accepted
• Longer terms only with established client relationships or larger projects
• Progress payments on longer projects reduce your risk

Payment Terms Templates

Standard Templates

14 days:

"Payment due within 14 days of invoice date, without deduction."

30 days:

"Please transfer the invoice amount to the account listed below within 30 days."

With specific date:

"Payment due by February 28, 2025, without deduction."

Immediate payment:

"The invoice amount is due immediately upon receipt."

Templates with Early Payment Discount

Discounts motivate quick payment:

"Payment due within 30 days. 2% discount if paid within 7 days."

"2% discount within 7 days, net 30 days."

Is offering a discount worth it? 2% discount for 23 days earlier = about 31% annual interest for the client. Many companies use this because it's cheaper than their credit terms.

Templates with Late Payment Warning

Polite but firm:

"Payment due within 14 days. After this period, we reserve the right to charge late payment interest according to applicable law."

More direct:

"Payment terms: 14 days. In case of non-payment, we reserve the right to charge late payment interest plus a fixed compensation fee."

Friendly Templates

Positively worded:

"We look forward to receiving your payment within 14 days."

With thanks:

"Please transfer the amount within 14 days. Thank you for your prompt payment!"

When Does the Payment Period Start?

This is more important than many think:

"Within 14 days" – but from when?

• From invoice date: Clear, easy to calculate
• From receipt of invoice: Legally correct, but when is "receipt"?
• From delivery: Common with physical goods

Recommendation: Be specific.

"Payment due within 14 days of invoice date (January 15, 2025), no later than January 29, 2025."

This eliminates any discussion.

Late Payment: What Happens After the Deadline?

If the client doesn't pay within the payment terms, they're in default. Then you can:

1. Charge Late Payment Interest

Interest rates vary by jurisdiction. In many places:

• B2B: 8-10% above base rate
• B2C: 5% above base rate

Calculation:

Late interest = Invoice amount × Interest rate × (Days late ÷ 365)

Example:
$5,000 × 10% × (30 ÷ 365) = $41.10

2. Claim Fixed Compensation (B2B)

In many jurisdictions, you can claim a fixed amount for debt recovery costs – in addition to late interest.

3. Further Damages

If the delay causes additional costs (lawyer, collection agency), you can claim these.

Set Payment Terms in the Proposal

The best time to clarify payment terms: In the proposal, not just on the invoice.

In the proposal:

"Payment terms: 50% deposit upon contract signing, 50% upon project completion. Payment due within 14 days of each invoice."

Why?

• Client agrees to terms before project start
• No surprises with the invoice
• Better negotiating position

Payment Terms with Enterprise Clients

Large corporations often have their own "payment policies":

"We pay 60 days after receipt of invoice."

Your options:

1. Accept: Sometimes unavoidable with important clients
2. Negotiate: "My standard is 14 days. We can meet at 30 days."
3. Adjust price: Longer payment terms = higher price (financing costs)
4. Decline: If the conditions don't work for you

Pro tip: Ask about payment terms before submitting your proposal. Then you know what you're getting into.

Tips for Faster Payment

1. Send Invoice Immediately

The faster the invoice goes out, the faster the money comes in. Best practice: Same day as project completion.

2. Set Short Payment Terms

Studies show: Shorter deadlines lead to faster payment. 14 days instead of 30 days often works.

3. Clear Payment Information

Include on the invoice:

• Bank details clearly visible
• Account holder name
• Reference (invoice number)

The easier you make it, the faster they'll pay.

4. Offer Early Payment Discount

2% discount for payment within 7 days motivates. And you get the money sooner.

5. Agree on Progress Payments

For larger projects:

• 30% upon contract signing
• 30% at milestone X
• 40% upon completion

This minimizes your risk and improves cash flow.

6. Send Friendly Reminders

2-3 days before deadline:

"Quick reminder: Invoice #2024-042 is due on January 28. Please let me know if you have any questions."

Often clients don't pay because they forgot – not because they don't want to.

7. Automate

Use invoicing software that:

• Automatically sends payment reminders
• Tracks payment receipt
• Generates collection letters

Template: Payment Terms on Invoice

PAYMENT TERMS

Invoice Amount: $5,950.00 (including applicable taxes)

Payment Due: 14 days (by January 29, 2025)
Early Payment: 2% discount if paid by January 22, 2025
Discounted Amount: $5,831.00

Bank Details:
Max Smith IT Consulting
Account: XXXX-XXXX-XXXX
Routing: XXXX
Reference: INV-2025-012

Late payments will incur interest charges according to
applicable law, plus collection costs.

Legal Pitfalls to Avoid

Standard Terms vs. Individual Agreement

Payment terms in standard terms must be "reasonable." Excessively long periods (e.g., 120 days) may be unenforceable.

Better: Agree individually in the proposal.

Required Invoice Information

Payment terms aren't usually a legal requirement on invoices. But if you state discounts or late interest, they must be correct.

Statute of Limitations

Claims expire after a certain period (varies by jurisdiction). Keep track of aging receivables.

Conclusion: Payment Terms Are Your Business

Payment terms determine your cash flow. As a freelancer, cash flow is survival.

Key points:

• Always state payment terms
• 14 days is standard and accepted
• Set terms in the proposal, not just the invoice
• Late payment interest and fees are your right
• Short terms and discounts speed up payment

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From Proposal to Invoice

Good payment terms start in the proposal. When the client agrees to your payment conditions before project start, there's no discussion later.

With SimpleProposals, you create professional proposals with clear payment terms – structured, legally sound, convincing.

Create professional proposals now