The short answer: payment terms say when an invoice must be paid, counted from the invoice date unless you say otherwise. Write them as a term and a date, for example “Net 14: due 23 October 2026”. If you and a business customer agree nothing, UK law treats the payment as late 30 days after the customer gets your invoice or the work, whichever is later (GOV.UK), and EU law sets the same 30-day default (Directive 2011/7/EU).
Payment terms and what they mean
| Term | Meaning | Example on a 9 October 2026 invoice |
|---|---|---|
| Due on receipt | Payable as soon as the invoice arrives | Due on receipt |
| Net 7, Net 14 | Due 7 or 14 days after the invoice date | Net 14: due 23 October 2026 |
| Net 30 | Due 30 days after the invoice date | Net 30: due 8 November 2026 |
| Net 60, Net 90 | Due 60 or 90 days after the invoice date | Net 60: due 8 December 2026 |
| EOM | Due at the end of the month the invoice is dated | EOM: due 31 October 2026 |
| 2/10 Net 30 | 2% off if paid within 10 days, otherwise the full amount in 30 | 2% off by 19 October, full amount by 8 November |
| Payment in advance | Paid before the work starts or the goods ship | Due before 16 October start date |
| Deposit and balance | Part before the work, the rest on completion | 50% now, 50% within 7 days of completion |
“Net” means the full amount after any discounts already on the invoice. Always add the date: people read dates, few count days.
What the law sets when you agree nothing
| Where | Rule | Source |
|---|---|---|
| UK, any customer | Unless you agree a payment date, the customer must pay within 30 days of getting your invoice or the goods or service. | GOV.UK: payment obligations |
| UK, business customers | With no agreed date, payment is late 30 days after the later of the invoice arriving or the work being done. An agreed date must usually be within 60 days for business transactions and 30 days for public authorities; a longer period between businesses has to be fair to both. | GOV.UK: late commercial payments |
| EU, business customers | With no period in the contract, interest runs from 30 calendar days after the customer receives the invoice. A contract period over 60 days is allowed only if expressly agreed and not grossly unfair to the supplier. | Directive 2011/7/EU, art. 3 |
| US federal agencies | Under the Prompt Payment Act, an agency that pays a proper invoice late must pay interest; the rate for July to December 2026 is 4.75%. | US Treasury: Prompt Payment |
Between private businesses in the US, and with consumers in most places, the terms are what you agree, so put them in the quote or contract as well as on the invoice.
What an early-payment discount really costs
“2/10 Net 30” gives the client 2% for paying 20 days early. On a £5,000 invoice that is £100 to be paid 20 days sooner. As a yearly rate it is 2 ÷ 98 × 365 ÷ 20 = 37.2%, which is why it is usually cheaper to ask for a deposit or shorter terms than to offer a discount.
VAT-registered in the UK and offering a prompt-payment discount? VAT is due on the amount actually paid. If you don’t issue a credit note when the discount is taken, HMRC says the invoice must show the discount terms and that the customer can only recover the VAT actually paid, and recommends this wording (VAT Notice 700, 18.2.2):
A discount of X% of the full price applies if payment is made within Y days of the invoice date. No credit note will be issued. Following payment you must ensure you have only recovered the VAT actually paid.
Choosing terms for a client
- Small one-off jobs: due on receipt or Net 7 keeps the gap between work and payment short.
- Larger projects: a deposit and stage payments, so you are never owed more than you can afford to lose.
- Large companies: ask about their purchase order and payment-run process before you quote, and write their terms into your quote so the invoice matches.
- Repeat clients: keep the same terms on every invoice. Changing them invites disputes about which applies.
Late payers: the late payment interest calculator works out statutory interest and compensation for UK and Irish business invoices, and how to charge a late payment fee covers the wording.
Sources checked 9 October 2026: GOV.UK invoicing and late payment guidance, HMRC VAT Notice 700 (updated 25 June 2026), Directive 2011/7/EU, US Treasury Prompt Payment page (updated 30 June 2026).