Invoice Payment Terms Explained
What the most common UK invoice payment terms mean, when to use each, and how UK late-payment law backs you up if a client ignores them.
"Net 14" means payment is due 14 days from the invoice date. "Net 30" means 30 days. "EOM" means end of the month the invoice is issued. "2/10 Net 30" means a 2% discount if paid in 10 days, otherwise full payment in 30. Most UK B2B contracts default to 30 days unless agreed otherwise; the Late Payment of Commercial Debts Act adds statutory interest and compensation when payment runs late.
The basics
Payment terms are the contract for when and how a customer pays you. They belong on every invoice, but they should already be in the quote, purchase order or contract that preceded the invoice — surprises at invoice time are how disputes start. State them in days from the invoice date, name the payment method, and reference the invoice number for the payment.
Common terms
| Term | Meaning | Typical use |
|---|---|---|
| Net 7 | Payment due 7 days from invoice date | Small jobs, new clients, deposits |
| Net 14 | Payment due 14 days from invoice date | Most freelancers, agencies, consultancies |
| Net 30 | Payment due 30 days from invoice date | B2B norm, larger corporates |
| Net 60 / 90 | Payment due 60 or 90 days | Major corporates, some retail supply |
| EOM | Due at end of the month invoiced | Easy to track but can stretch up to ~30 days |
| End of month + 30 | Due 30 days after month end | Common with large customers — slow |
| 2/10 Net 30 | 2% discount if paid in 10 days, otherwise net 30 | Encourages faster payment |
| Due on receipt | Payment expected immediately | Pre-paid, deposit, retail |
| 50/50 | Half up front, half on delivery | Project work, custom builds |
Choosing terms that work for your business
- Shorter is better for cashflow, but unrealistic terms get ignored. Pick something the customer can plausibly pay.
- Net 14 is the sweet spot for many UK service businesses — short enough to keep cash moving, long enough to feel professional.
- Larger customers often have rigid AP processes. Negotiating from Net 60 down to Net 30 may be easier than pushing for Net 7.
- New clients can reasonably be asked for a deposit or upfront payment until a track record is established.
- Avoid "EOM" alone if you're chasing cash — it lets a 1st-of-the-month invoice drift towards 30 days even on "best behaviour".
UK late-payment law
If a B2B customer pays late, the Late Payment of Commercial Debts (Interest) Act 1998 (as amended) gives you a statutory right to:
- Statutory interest at the Bank of England base rate plus 8% on overdue amounts.
- Compensation per invoice, on a sliding scale (£40 for debts under £1,000, £70 for £1,000–£9,999, £100 for £10,000+).
- Reasonable recovery costs above the fixed compensation if those costs exceed the standard amount.
If terms aren't agreed in advance, the legislative default is 30 days from the later of invoice receipt or delivery of the goods/services. You don't have to charge statutory interest, but mentioning the right on overdue reminders often unblocks payment quickly.
Including a calm "We reserve the right to charge statutory interest and compensation under the Late Payment of Commercial Debts Act 1998 if this invoice remains unpaid" on overdue reminders is usually more effective than threatening it on the first invoice.
Early-payment discounts
"2/10 Net 30" — a 2% discount for paying within 10 days, full price at 30 — works in some sectors and not others. The maths only makes sense if the cash truly is worth more than 2% earlier. For most service businesses, a slightly shorter payment term (Net 7 or Net 14) is more effective than a discount.
Sample wording for invoices
Payment terms: Net 14 (payable 14 days from invoice date) Pay by bank transfer to: Account name: Your Business Name Ltd Sort code: 00-00-00 | Account number: 00000000 Reference: <invoice number> Late payments may incur statutory interest and compensation under the Late Payment of Commercial Debts (Interest) Act 1998.
Frequently asked questions
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Information on this page is general guidance for UK small businesses and is not financial, tax or legal advice. Tax rules, allowances and product terms change. Always check current information with HMRC, Companies House or a qualified professional before making decisions.