Payment Terms Clause Template for B2B Invoices

Anatomy of a payment terms clause

A well-constructed payment clause does four things: it states the due date with clarity ("30 days from invoice date" rather than "30 days net" which is ambiguous); it specifies the payment method and any banking details; it sets out what interest accrues on late amounts; and it addresses how part-payments are allocated — for example, to the oldest invoice first.

Ambiguous clauses such as "payment within a reasonable time" give clients maximum latitude and leave you with minimum leverage. Precision protects cash flow.

Sample clause wording (illustrative, not legal advice)

The following structure can be adapted with your solicitor's guidance:

• "Invoices are payable within [30] calendar days of the invoice date."
• "Payment shall be made by BACS transfer to the account details shown on the invoice. Payment is not deemed received until funds clear in the Company's nominated account."
• "Without prejudice to any other right or remedy, the Company reserves the right to charge interest on overdue amounts at the rate of 8% per annum above the Bank of England base rate, accruing daily, pursuant to the Late Payment of Commercial Debts (Interest) Act 1998."
• "The Company may also claim reasonable debt recovery costs in accordance with the Late Payment Act."

These are illustrative drafts only. Have your solicitor review and adapt them for your specific circumstances.

Deposits and milestone payments

For project-based work or long-duration contracts, consider breaking payment into tranches: an upfront deposit (typically 25–50%), progress milestones, and a final payment on completion. Each milestone should be tied to a defined deliverable, not a date, so disputes about whether the trigger was met are easier to resolve.

Clearly state whether the deposit is refundable if the client cancels, and under what conditions. An ambiguous deposit clause is a common source of disputes in professional services contracts.