This is general information, not tax or legal advice. Rules and rates change, so check GOV.UK or ask an accountant.
Payment terms tell a customer when an invoice must be paid. They are one of the few levers you control over your own cash flow.
What the common terms mean
- Due on receipt: payable as soon as the invoice arrives.
- Net 7, Net 14, Net 30: payable in full within 7, 14 or 30 days of the invoice date.
- Net 30 EOM: 30 days after the end of the month of the invoice.
- Deposit and balance: part up front, the rest on completion.
How to choose
- Your own bills. If you pay suppliers in 14 days, offering customers 60 days leaves you funding the gap.
- Your customer type. Individuals and small firms can be asked for shorter terms. Large companies often insist on 30 to 60 days.
- The size of the job. Ask for a deposit on larger work.
- Your margin. Thin margins cannot absorb long waits.
A common default for small service businesses is 14 days. Move to 30 only when a customer needs it.
How to word them
- Put the due date, not only “30 days”, on every invoice.
- State how to pay: bank details and reference.
- State what happens if payment is late, such as interest or a fee, and agree it in your contract or terms.
- Confirm the terms on the quote, so nothing surprises the customer.
Late payment rights between businesses
UK law allows businesses to claim statutory interest and fixed compensation on late commercial debts, in addition to the invoice. Rates and amounts are set by law, so check GOV.UK. See also late payment email templates and nine ways to get paid faster.
Encourage early payment
- Send invoices the day the work is done.
- Send a reminder before the due date.
- Make paying easy, with clear bank details.
How AvrioBooks helps
Set a due date on each invoice, see overdue amounts on the aged receivables report and send customer statements. See invoicing software and how to read an aged receivables report.
Frequently asked questions
What does net 30 mean?
The invoice must be paid in full within 30 days of the invoice date.
What payment terms should a small business use?
Many small service businesses use 14 days and extend to 30 only when a customer needs it. Take deposits on larger jobs.
Can I charge interest on late payments?
Between businesses, UK law allows statutory interest and fixed compensation on late commercial debts. Check GOV.UK for current rules.
Should I put the due date on invoices?
Yes. A specific date is clearer than "30 days".
Keep reading
How to build a simple annual budget and track it monthly
A budget does not need to be complicated. Here is a simple way to build one and actually use it.
10 November 2026 · 6 min read
How to record a business loan and its repayments
A loan is not income, and repayments are only partly an expense. Here is how to record both correctly.
10 November 2026 · 6 min read
Invoice numbering: how to number invoices and fix mistakes
A clean invoice sequence makes audits and VAT easier. Here is how to number invoices and fix mistakes safely.
10 November 2026 · 5 min read