Payment Terms Advisor
Answer four questions about the job and the customer. You get a suggested term, a deposit percentage and wording you can paste straight onto an invoice. It is a starting point built from common trade practice, not advice about your specific contract.
What this tool does
Most small suppliers pick payment terms once, copy them forever, and never revisit whether they suit the work. Net 30 on a £200 job for a new customer is generous; Net 30 on a £40,000 project with no deposit is a serious risk concentration.
This tool applies the rules of thumb that experienced suppliers use: shorter terms and a deposit for new customers and large projects, longer terms where the customer is a large organisation whose payment cycle you cannot change, and staged billing once a project outgrows a single invoice. The output is a recommendation with its reasoning shown, so you can disagree with it deliberately rather than by default.
How it works
Start from the customer, not the invoice
Customer type dominates. A new customer with no payment history carries more risk than a long-standing one, regardless of the amount. Large corporates and public bodies pay reliably but slowly, and usually on their terms rather than yours.
Scale the deposit to the exposure
The deposit exists to cover what you cannot recover if the job stops — materials bought, time committed, work that has no value to anyone else. Larger and longer projects need more of it up front.
Shorten terms as risk rises
Risk is reduced far more by being paid sooner than by a late fee clause. A high-risk job on Net 7 with a deposit is safer than the same job on Net 30 with 5% monthly interest you may never collect.
Split anything large into stages
Once a project is large enough that non-payment would genuinely hurt, a single invoice at the end is the wrong instrument. Staged billing caps the exposure at one stage rather than the whole project.
Worked example
A freelance developer quotes £12,000 for a three-month build for a new small-business client.
Inputs
- Industry
- Professional services
- Invoice amount
- £12,000
- Customer type
- New customer
- Risk assessment
- Medium
Result
- Recommended term
- Net 14
- Deposit
- 30% (£3,600)
- Billing
- Staged — deposit, milestones, final
- Wording
- Provided, ready to paste
Why it matters: The exposure is not £12,000, it is whatever is unbilled at any moment. A 30% deposit and staged billing on Net 14 caps that at a few thousand pounds, without asking the client for anything unusual.
Best practices
- Agree terms in writing before work starts. Terms that first appear on the invoice are a proposal, not an agreement.
- Take a deposit on every new customer relationship, however small. It establishes that payment is part of the process and filters out the clients who were never going to pay.
- Ask large customers for their standard terms early. If they pay on Net 60 regardless of what you invoice, plan cash flow around Net 60 rather than arguing about it.
- Put the due date, the accepted payment methods and the bank details on the invoice itself. A surprising share of late payment is administrative friction, not reluctance.
- Revisit terms for repeat customers who consistently pay on time — extending terms is a cheap loyalty concession that costs nothing if they pay as they always have.
Common mistakes
Using one set of terms for every customer and every job size
The same Net 30 applied to a £150 job and a £40,000 project treats wildly different risks identically. Terms should scale with exposure.
Skipping the deposit to win the work
A client who will not pay a deposit is telling you something about how they will treat the final invoice. The deposit is the cheapest credit check available.
Offering long terms as a competitive concession
Net 60 to win a job means financing the customer for two months. If the margin does not cover the cost of that, the concession is a loss disguised as a sale.
Setting terms you do not enforce
Net 14 that is never chased becomes Net 45 in practice, and the customer learns which is real. Terms are only worth what your follow-up makes them worth.
Frequently asked questions
What payment terms should a freelancer use?
Net 14 is a reasonable default for freelance work, with a deposit of 25–50% for new clients or anything spanning more than a few weeks. Net 30 is common when working with larger organisations whose payment runs make anything shorter unrealistic.
How much deposit should I ask for?
Enough to cover what you would lose if the job stopped after you had committed to it — typically 25–50% for project work, and more where you are buying materials up front. For long projects, staged billing matters more than the size of the initial deposit.
Can I ask for payment before starting work?
Yes, and for new customers or small jobs it is common. Payment in advance, a deposit, or a first milestone billed at the start are all normal commercial arrangements — the key is agreeing it before work begins rather than raising it later.
What terms do large companies usually impose?
Net 30 to Net 60 is typical, and Net 90 appears in some sectors. Large buyers generally operate fixed payment runs, so the practical question is which run your invoice reaches rather than what your terms say. Invoicing immediately and correctly matters more than the number.
Should terms differ by industry?
In practice they do. Construction and wholesale lean on staged billing and longer terms; professional services and creative work lean on deposits and shorter terms; retail and trades often bill on completion or on receipt. The tool uses those conventions as a starting point.
Is this legal advice?
No. These are common commercial conventions, not advice about your contract or your jurisdiction. Statutory rules on payment terms, deposits and consumer contracts vary by country and by whether you are selling to a business or a consumer.
Turn the answer into an invoice
The result above transfers straight into the invoice generator — dates, amounts and terms already filled in. Free, no account needed.
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Published · General information, not legal, tax or financial advice.